New Delhi: Global credit rating agency Fitch on Friday affirmed India’s sovereign rating at ‘BBB-‘ with ‘stable’ outlook, saying that the country’s medium-term growth potential is strong. ‘BBB-‘ rating indicates lowest investment grade.
“India’s rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment,” Fitch said.
It projected India’s growth at 7.3 per cent in the current fiscal year and further to 7.5 per cent in 2019-20. Growth is projected to be 6.7 per cent in the last fiscal year, which ended on March 31, 2018.
“The Stable Outlook reflects Fitch’s assessment that upside and downside risks to the ratings are broadly balanced,” Fitch said.
The Fitch review for annual sovereign rating follows India’s rating upgrade by Moody’s after a gap of 14 years. S&P had retained the earlier rating.
Fitch said India’s fiscal finances are weak but current account deficit position is favourable.
Per capita GDP is the lowest among ‘BBB’ range peers and continued structural reform implementation should enhance productivity.
“India has the highest medium-term growth potential among the largest emerging markets,” according to Fitch analysis.
Fitch had assigned the rating to the country 11 years ago.
Fitch had last upgraded the rating from ‘BB+’ to ‘BBB-‘ with stable outlook on August 1, 2006. Later, it changed the outlook to negative in 2012 and then again to stable in the following year, though it kept the rating unchanged at the lowest investment grade.