Mumbai: Credit rating agency Fitch Thursday affirmed India’s ‘Long-Term Foreign-Currency Issuer Default Rating’ (IDR) at ‘BBB-’ with a stable outlook.
“India’s ratings balance a strong medium-term growth outlook and relative external resilience stemming from strong foreign reserve buffers, against high public debt, a weak financial sector and some lagging structural factors,” Fitch said in a statement.
“A robust growth outlook continues to support India’s credit profile.” The credit rating agency expects a growth of 6.8 per cent in the fiscal year ending March 2020 (FY20) and 7.1 per cent in FY21, supported by accommodative monetary policy, an easing of bank regulations, and government spending.
“We estimate real GDP growth to have slowed slightly to 6.9 per cent in FY19 from 7.1 per cent a year earlier. A deceleration in recent quarters has mainly been domestically driven, from weak manufacturing performance and low food inflation weighing on farmers’ incomes,” the statement said.
“Limited available indicators also point to a rise in unemployment,” it added.
According to recently revised official Gross Domestic Product (GDP) data, growth averaged 7.5 per cent in the five years up to and including FY19, which is more than twice as fast as the historical ‘BBB’ peer median of 3.6 per cent.
As per the statement, general elections to be carried out from April 11 to May 19 result in some temporary uncertainty about the policy agenda.
“Over the past 30 years, governments of different political persuasions have been generally reform-minded,” the statement said.
“The current government has implemented some ambitious and transformative reforms, notably the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code, while some other reforms so far seem to have had less traction.”
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