Fitch affirms India's sovereign rating at 'BBB-'

Fitch Ratings on Tuesday affirmed India's sovereign credit rating at 'BBB-' with a stable outlook, saying the rating derives strengths from the country's robust growth outlook and still-resilient external finances.

It said India's robust medium-term growth outlook is a key supporting factor for the rating. A clear improvement in corporate and bank balance sheets, which were under strain prior to the pandemic, is likely to facilitate a steady acceleration in investment in the coming years.

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Nevertheless, risks remain given dynamics in labour force participation, the lagging rural sector recovery, and uneven reform implementation record, Fitch added.

"Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook," the rating agency said in a statement.

Fitch has forecast GDP growth of 7 per cent in the fiscal year ending March 2023 (FY23).

"India is somewhat insulated from the gloomy global outlook in 2023, given its modest reliance on external demand. Nevertheless, we expect declining exports, heightened uncertainty and higher interest rates to slow growth to 6.2 per cent in FY24," it noted.