Global rating agencies Fitch and Moody’s presented a cautiously optimistic view of India’s economic prospects on Thursday, with Fitch affirming the sovereign credit rating at ‘BBB-’ with a stable outlook and Moody’s raising its growth projections for 2024 and 2025.
Fitch maintained India’s rating at ‘BBB-’, the lowest investment grade, which is in place since August 2006.
The agency pointed to India’s robust medium-term growth outlook as a critical factor supporting the rating, emphasising that this growth would likely enhance the country’s structural credit profile, including its share of global GDP and its solid external finance position.
The agency highlighted India’s progress in fiscal management, noting the achievement of deficit targets, increased transparency and strong revenue collections.
According to Fitch, these developments suggest a modest downward trend in government debt over the medium term.
However, the agency flagged concerns about India’s fiscal metrics, pointing out that deficits, debt levels, and the debt service burden remain high compared with peers in the ‘BBB’ rating range.
The agency forecasts GDP growth of 7.2 per cent for the fiscal year ending March 2025 (FY25) and 6.5 per cent for FY26.
Meanwhile, Moody’s Investors Service provided a more upbeat outlook, raising its growth projections for India to 7.2 per cent in 2024, up from a previous estimate of 6.8 per cent, and to 6.6 per cent in 2025, up from 6.4 per cent.
Moody’s attributed these revised forecasts to improving rural demand and strong industrial and service performance. The agency noted that the services PMI has remained consistently above 60 since the start of the year, indicating robust activity.
Moody’s also pointed to household consumption as a potential growth driver, as headline inflation trends toward the RBI’s target.