Fitch Ratings affirmed India’s sovereign rating at ‘BBB-’, with a stable outlook, citing the country’s robust growth prospects, improving macroeconomic stability and strong external finances.


“India's rating reflects its robust growth outlook and solid external finance fundamentals,” the rating agency said on August 11, adding that a strengthening record of macroeconomic stability and improving policy credibility should support continued growth.

However, weak fiscal metrics, including high government deficits, debt and debt-servicing costs relative to similarly rated countries, continue to constrain India’s rating, it added.

On the growth front, the ratings agency expects growth to slow to 6.4 percent in FY27, from 7.4 percent average recorded over the previous three years.

Despite the moderation, India’s projected growth rate is more than three times the 2 percent median for countries in the BBB rating category.

The agency said India has demonstrated resilience to economic shocks in recent years and expects this trend to continue.

While uncertainty surrounding the US-Iran conflict poses risks because of India’s dependence on imported energy, Fitch does not expect it to cause lasting damage to the country’s growth prospects.

Over the medium term, Fitch estimates India’s potential growth rate at 6.4 percent, supported by public capital expenditure, a recovery in private investment and favourable demographics.

“Healthy corporate and bank balance sheets should support private investment, while GST and labour code reforms, deregulation measures and greater trade openness could provide an additional boost,” it added.