Fitch affirms India's sovereign debt rating of 'BBB-', outlook stable

Rating reflects India's growth potential amid global uncertainties

Fitch Ratings has affirmed India's sovereign debt rating at 'BBB-', with a stable outlook. The agency said the rating reflects India's strong growth potential, robust external position, and improving public finances.

Key rating drivers

• Strong growth potential: India is expected to grow at 6.5% in 2023-24, making it one of the fastest-growing major economies in the world.
• Robust external position: India's current account deficit is expected to narrow to 3.5% of GDP in 2023-24, from 4.2% in the previous year. The country's foreign exchange reserves are also at a record high.
• Improving public finances: The government's fiscal deficit is expected to narrow to 5.8% of GDP in 2023-24, from 6.4% in the previous year. The government has also taken steps to reduce public debt.

Risks to the rating

Fitch said the key risks to the rating include:

• Slowing global growth: A slowdown in global growth could hurt India's exports and economic growth.
• Rising inflation: High inflation could erode consumer purchasing power and lead to social unrest.
• Fiscal slippage: The government's fiscal deficit could widen if it fails to implement its fiscal consolidation plans.

Outlook

Fitch said the stable outlook reflects its view that the risks to the rating are balanced. The agency said it expects India's growth to remain strong and its external and fiscal positions to continue to improve. However, Fitch said it will continue to monitor the risks to the rating, including the impact of slowing global growth and rising inflation.

For more information, please refer to the full Fitch Ratings press release.