Fitch affirms India's 'BBB-' rating, says outlook stable

International ratings agency Fitch on Thursday affirmed India's long-term 'BBB-' rating, keeping its outlook stable.

"India's ratings are underpinned by its strong medium-term growth outlook, which will continue to drive improvement in structural aspects of its credit profile, including India's share of GDP in the global economy, as well as its solid external finance position," the ratings agency said in its commentary on the move.

The agency added that India is set to remain amongst the fastest-growing economies in the world, pointing to public infra as a key growth driver, saying that it forecasts "GDP growth of 7.2% in the fiscal year ending March 2025 (FY25) and 6.5% in FY26, down slightly from 8.2% in FY24."


Strengthening fiscal credibility from recent achievement of deficit targets, enhanced transparency and buoyant revenues, have increased the likelihood that government debt can follow a modest downward trend in the medium term, it said.

Public infrastructure capex remains a key growth driver and has improved spending quality, helping mitigate the drag from fiscal consolidation, the ratings agency added, saying that "private investment in real estate is likely to remain strong and there are signs of a nascent pick-up in manufacturing investment."

While the agency pointed to a positive investment cycle, it also added that there was the risk of the private investment "weighing on job creation and dampening potential benefits from India's demographic dividend," if the investment cycle does not materialise.

Other concerns raised by the agency included fiscal metrics, which remain a credit weakness, while deficits, debt and debt service burden all high compared to India's 'BBB' range peers. Lagging structural metrics, including governance indicators and GDP per capita, also weigh on the rating, the commentary said.