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Fitch denies rating upgrade to India for 12th year in row

New Delhi :Refusing to upgrade India’s credit rating for the 12th year in a row, global ratings agency Fitch Ratings retained its sovereign rating at ‘BBB-’, the lowest investment grade with a stable outlook, saying that weak fiscal balances continue to constrain its ratings.

The government had made a strong pitch to Fitch Ratings for an upgrade after rival Moody’s Investors Service last November gave the country its first sovereign rating upgrade since 2004.

Fitch had last upgraded India’s sovereign rating from BB+ to BBB- with a stable outlook on August 1, 2006.


“Fitch Ratings has affirmed India’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-’ with a stable outlook,” the rating agency said in a statement.

“India’s rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment,” it said.

Fitch added that weak fiscal balances, the Achilles’ heel in India’s credit profile, continue to constrain its ratings.
“General government debt amounted to 69% of GDP in 2017-18 fiscal while fiscal slippage of 0.3% of GDP in both FY18 and FY19 relative to the government’s own budget targets of last year, implies a general government deficit of 7.1% of GDP,” it said.

The government aims to gradually reduce its fiscal deficit from 3.5% of GDP in 2017-18, but would not hit the 3% ceiling of the Fiscal Responsibility and Budget Management (FRBM) Act before March 2021, which is well beyond its current electoral term, Fitch said.