New Delhi: Global agency Fitch Ratings on Tuesday said it has retained the “BBB-” sovereign rating—the lowest investment grade—on India as weak public finances continue to constrain India’s ratings. The agency has also retained “stable” outlook for the country’s ratings.
Fitch forecasts India’s real gross domestic product (GDP) growth to accelerate to 7.7% in FY17 and FY18, from 7.1% in FY16.
The agency said, “India is not immune to external shocks, but country’s strong external finances make it less vulnerable than many of its peers, but weak public finances continue to constrain India’s ratings.”
It also said that is “not likely” that Indian government’s budgeted INR 700 billion capital injection into banks between FY16 and FY19 will be sufficient.
The agency also expects India’s current-account balance to narrow to -0.9% in FY17, and foreign reserves to build up to 8.4 months of current external payments.