Fitch Ratings affirmed India's sovereign rating at 'BBB-' on Tuesday, with a negative outlook. According to Fitch Ratings, India's grade is a mix of high public debt, a weak financial sector, and some lingering structural difficulties against a still-strong medium-term growth prospects and external resilience from robust foreign-reserve buffers.

"The country's quick economic recovery following the Covid-19 outbreak, as well as relieving banking sector constraints, are reducing medium-term growth threats. The rating's negative outlook, on the other hand, indicates ongoing uncertainty over India's medium-term debt trajectory, especially given the country's restricted budgetary headroom in comparison to its peers "It was stated.

According to the ratings agency, India's GDP is expected to increase by 8.7 percent in the fiscal year ending March 2022 (FY22) and 10 percent in the fiscal year ending March 2023 (FY23), owing to the country's economic resiliency, which has permitted a quick cyclical rebound from the Covid wave in 2Q21.

India's high medium-term growth projection in comparison to peers was cited by Fitch as a significant supportive factor for the grade and a key driver of the current baseline of a mildly falling public debt trajectory.

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