Fitch Ratings has kept India’s sovereign rating unchanged at BBB- with a negative outlook owing to a rise in public debt ratio and uncertainty on debt trajectory. The rating remains unchanged from April this year. “Negative trigger (is) failure to reduce the fiscal deficit to a level consistent with putting government debt/GDP on a downward trajectory,” analysts at the agency said at the Global Sovereign Conference 2021 Tuesday.
The agency noted reforms announced by the Indian government including the production-linked incentives scheme to attract foreign direct investment, privatisation, the national monetisation pipeline and reforms for the labour and agriculture sectors.
Analysts cautioned that the debt burden for the government could rise if fiscal measures announced in 2020 were to be gradually removed.
The agency had in April forecast a 12.8% recovery in GDP in fiscal year ending March 2022 (FY22), moderating to 5.8% in FY23, from an estimated contraction of 7.5% in FY21. It had also flagged increasing downside risk to the outlook from the surge in Covid-19 cases.