Global ratings agency Fitch Ratings has affirmed India’s sovereign rating at ‘BBB-‘ with a stable outlook, citing robust growth prospects, improving macroeconomic stability and strong external finances.
Fitch said in a note that India’s economy remains strong, despite headwinds from the energy shock. It has projected country’s GDP growth at 6.4 percent in Financial Year 2027. The GDP forecast was lower than 7.4 percent average recorded over the previous three years, but still three times the 2 per cent median growth rate for the ‘BBB’ rating category. Fitch said India’s medium-term growth outlook remains robust, led by public capital expenditure, a recovery in private investment, and favourable demographics. The agency added that healthy corporate and bank balance sheets could support private investment over time, despite recent restraint.
The ratings agency said it expects India’s resilience to external shocks to continue, although uncertainty surrounding the US-Iran conflict poses residual risks given the country’s position as a large net energy importer. Fitch expects the RBI to raise its policy rate by 25 basis points to 5.5 per cent later this year, citing risks of second-round effects from higher energy prices and El Nino conditions.
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