Muristek
New Delhi, June 10
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. The agency kept the rating unchanged at 'BBB-'.
The projections
Indian economy grew 8.7% in the last fiscal, and the RBI expects growth to be 7.2% in the current fiscalFitch 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 metricsIt has forecast growth of around 7% between FY24 and FY27, underpinned by government's infrastructure push, reform agenda and easing pressures in the financial sector"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% for the current fiscal (April 2022 to March 2023) from the 8.5% 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 pandemic shock," Fitch said.
Indian economy grew 8.7% in the last fiscal, and the country's central bank RBI expects growth to be 7.2% in the current fiscal.
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.
"We forecast growth of around 7% between FY24 and FY27, underpinned by the government's infrastructure push, reform agenda and easing pressures in the financial sector. Nevertheless, there are challenges to this forecast, given the uneven nature of the economic recovery and implementation risks for infrastructure spending and reforms," Fitch said.