Negative pressure on India’s creditworthiness remains visible and the ongoing health crisis will reduce economic activity in the near future, Fitch Ratings said.
It was On April 22, that the agency affirmed India’s long-term foreign-currency issuer default rating (IDR) at BBB-minus with a negative outlook.
Senior Director Duncan Innes-Coeur said the ranking continues to be supported by the country’s solid external position and a strong medium-term outlook. economic growth prospects.
Downside pressures on India's creditworthiness remain prominent and the ongoing health crisis will depress economic activity in the near term, Fitch Ratings has said.
However, the Covid-19 pandemic has put further stress on public finances which were already a source of rating weakness.
"We estimate that general government debt rose to 90.6 percent of GDP in the fiscal year ending March 2021 (FY21) from 73.9 percent in FY20, well above the BBB median of 54.4 percent in 2020," said Innes-Ker.
"The medium-term debt trajectory is core to our rating assessment as we believe higher debt levels constrain the government's ability to respond to future shocks and can lead to a crowding out of financing for the private sector," said Innes-Ker.
The government's reforms like the agricultural and labour market legislation passed in November can help to lift India's sustainable economic growth rate, which will aid fiscal consolidation. However, the changes remain subject to implementation risks.