Fitch improves India's rating outlook to stable on 'solid' medium-term growth prospects

Fitch Ratings has improved the outlook on India's sovereign rating to 'stable' from 'negative' after two years. 

New Delhi: Fitch Ratings on Friday upped the outlook on India's sovereign rating to 'stable' from 'negative' after two years, citing diminishing downside risks to medium-term growth on rapid economic recovery. Fitch Ratings kept the rating unchanged at 'BBB-'. "The Outlook revision reflects our view that downside risks to medium-term growth have diminished due to India's rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock," it said.

The agency, however, cut the economic growth forecast to 7.8 per cent for the current fiscal (April 2022 to March 2023) from the 8.5 per cent prediction it made in March due to the inflationary impact of the global commodity price shock.

"India's economy continues to see a solid recovery from the COVID-19 pandemic shock," Fitch said. (ALSO READ: 7th Pay Commission latest update: 5% DA hike coming in July? Will these 4 allowances also increase now after the hike in Dearness Allowance?)

Indian economy grew 8.7 per cent in the last fiscal, and the country's central bank RBI expects growth to be 7.2 per cent this fiscal. (ALSO READ: Warren Buffett’s Indian-origin disciple warns crypto investors, says ‘worst is yet to come’)

Stressing that India's medium-term growth prospects remain solid, Fitch said India's strong growth outlook relative to peers is a key supporting factor for the rating, and will sustain a gradual improvement in credit metrics.