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New Delhi. Global rating agency Fitch on Thursday retained India's credit rating at BBB with stable outlook, keeping India's rating at the lowest investment grade of BBB, the lowest investment grade since August 2006. The rating agency has retained India's long-term foreign currency issuer default rating (IDR) at BBB with stable outlook, Fitch Ratings said in a statement.
According to the statement, India's rating is supported by its strong medium-term growth outlook. This will be driven by India's share of gross domestic product (GDP) in the global economy, its solid external finance position and the improvement in structural aspects of its debt profile. Fitch said that the recent achievement of fiscal deficit targets, increased transparency and buoyancy in revenue have increased fiscal credibility. This has increased the possibility that India's government debt may decline marginally in the medium term.
Despite this, fiscal data remains a weakness in India's debt scenario. Deficit, debt and debt service burden are higher than other countries in the 'BBB' category. Governance indicators and decline in per capita GDP also affect the rating. India will remain the fastest growing country Amid expectations that India will remain one of the fastest growing countries globally, Fitch Ratings said, we estimate GDP growth of 7.2 percent in FY 2024-25 and 6.5 percent in the next financial year.
This is slightly lower than 8.2 percent in FY 2023-24. It said that capital expenditure in public infrastructure remains a key driver of growth and has improved the quality of expenditure. This has helped in reducing the stress caused by fiscal consolidation. Apart from this, private investment in real estate is likely to remain strong and there are signs of a pick-up in manufacturing investment.
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