Fitch affirms BBB-sovereign rating, sees 6% growth in FY24


NEW DELHI: The global rating agency Fitch confirmed India’s government rating at BBB (minus) on Tuesday with a stable outlook. It said the strengths of a robust growth outlook relative to its peers and robust external finances have helped India weather the major external shocks over the past year, but weak public finances remain an obstacle.
“We forecast India to be one of the fastest growing Fitch-rated countries globally at 6% for the fiscal year to March 2024 (FY24), underpinned by resilience investment Outlook. Still, there are headwinds from elevated inflation, high interest rates and subdued growth global demand“Coupled with easing pent-up demand caused by the pandemic, growth will slow from our estimate of 7% for FY23 before rebounding to 6.7% by FY25,” Fitch Ratings said.
Other rating agencies such as S&P and Moody’s also have India’s lowest investment grade rating with a stable outlook. The actions of the rating agencies will help strengthen the positive mood and reduce the cost of borrowing for companies. According to Fitch, strong growth potential is an important supportive factor for country ratings.
“Growth prospects have brightened as the private sector appears poised for stronger investment growth after improving corporate and bank balance sheets in recent years, helped by the government’s infrastructure efforts. However, risks remain given low labor force participation rates and an uneven track record of reform implementation,” the agency said.
Because of its large domestic market, India is an attractive destination for foreign companies, it said.

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