Fitch affirms India rating on growth, flags youth job risks
AgenciesCredit ratings agency Fitch on Tuesday affirmed India’s sovereign rating at ‘BBB-‘, citing robust growth balanced against still-weak fiscal metrics that it reckons could fa...
Credit ratings firm Fitch has maintained India's sovereign rating at 'BBB-' in a report released on Tuesday. The agency highlighted India's growing economy as a reason for the affirmation, while also cautioning that fiscal metrics could face pressure due to rising concerns over youth unemployment. Fitch has kept India's rating at 'BBB-' since 2006, while its competitors Moody's and S&P Global Ratings have held 'Baa3' and 'BBB' ratings respectively since June 2020.
The agency anticipates India's economy to expand at 6.4 percent in real terms for the fiscal year 2027, slightly lower than the 3-year average but still higher than the median for its credit rating category. Despite a challenging energy situation triggered by the Middle East conflict, Fitch believes India's economic growth and external buffers will hold despite the near-term headwinds.
Although India's government debt stands at 84.4 percent of GDP, which is higher than the 'BBB' median, Fitch expects the debt to gradually decrease to around 79 percent by FY31. The rating reflects India's solid external finances, with foreign exchange reserves projected to reach $733 billion by the end of FY2027.
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