Fitch says India to remain one of fastest-growing countries but...

Global ratings agency Fitch affirmed India’s long-term foreign currency issuer default ratings at ’BBB-’ with a stable outlook, but flagged that the country’s weak public finances were the ”largest constraint” to the rating.

Fitch expects the federal government to achieve its fiscal deficit target of 5.9% of gross domestic product in fiscal year 2024 from 6.4% in fiscal year 2023 but said the goal to reduce that deficit to 4.5% by fiscal year 2026 will be challenging.

”Beyond FY24 there is less certainty on the fiscal path and trade-offs between economic growth and consolidation may become more acute,” Fitch said.

The global ratings agency estimated India’s economy will grow 6.9% this fiscal year ending March 2024 and by 6.5% the year after and forecast headline inflation will ease towards 4.7% by the end of 2024 with a 75 basis points policy rate cut by the central bank in fiscal year 2025.

The ratings agency said: "India is poised to remain one of the fastest-growing countries globally in the next few years."