Fitch Affirms ‘BBB-’ Rating for India

Fitch Ratings on Thursday affirmed its ‘BBB-’ sovereign rating of India, while saying that the recent surge in coronavirus cases posed increasing downside risks to the country’s fiscal 2022 GDP growth outlook.

The current wave of the pandemic may delay India’s economic recovery, but is unlikely to derail it, Fitch said. It maintained a negative outlook for the rating, reflecting “lingering uncertainty around the debt trajectory”.

For India, it has forecast GDP growth of 12.8% in FY22, moderating to 5.8% in FY23.

India on Thursday reported 3.14 lakh new Covid cases, the world’s highest single-day tally.

The negative outlook, Fitch said, reflected lingering uncertainty around the debt trajectory following the sharp deterioration in India's public finance metrics due to the pandemic shock from a previous position of limited fiscal headroom.

Fitch expects pandemic-related restrictions to remain localised and less stringent than the national lockdown in 2020, even as the vaccine rollout has been stepped up.

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