Fitch Ratings affirms India`s sovereign rating at `BBB-` with stable outlook
Fitch Ratings has affirmed India’s sovereign rating at ‘BBB-', with a stable outlook. It said India has a strong record of delivering growth and improving fiscal credibility, which will drive improvements in structural metrics. Fitch said ‘India’s ratings are supported by its robust growth and solid external finances,’ as it forecast GDP growth of 6.5 per cent in the fiscal year ending March 2026 (FY26), unchanged from FY25, and well above the ‘BBB’ median of 2.5 per cent.
It stated India’s economic outlook remains strong relative to peers, even as momentum has moderated in the past two years. Moreover, it said proposed goods and services tax (GST) reforms, if adopted, would support consumption, offsetting some of these growth risks. The Centre has proposed to the Group of Ministers on GST rate rationalisation a 2-tier rate structure of 5 and 18 per cent for ‘merit’ and ‘standard’ goods and services, and a 40 per cent rate for about 5-7 goods. The proposal entails doing away with the current 12 and 28 per cent tax slabs.
Fitch Ratings stated ‘A strengthening record on delivering growth with macro stability and improving fiscal credibility should drive a steady improvement in its structural metrics, including GDP per capita, and increase the likelihood that debt can trend modestly downward in the medium term.’ However, it flagged fiscal metrics as a credit weakness, given the high deficits and debt compared to ‘BBB’ peers. It said ‘Lagging structural metrics, including governance indicators and GDP per capita, also constrain the rating.’
