It said the immediate financial-sector pressure has eased and the level of asset quality deterioration from the pandemic also appears less severe. We forecast growth of around 7 per cent between FY24 and FY26, supported by the government's reform agenda and the closing of the negative output resulting from the pandemic shock," the agency said.
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"India's strong medium-term growth outlook relative to peers is a key supporting factor for the rating and an important driver of our current baseline of a modestly declining public debt trajectory. While potential remains for a resurgence in coronavirus cases, it said its economic impact would be less pronounced than previous surges due to the sustained improvement in the vaccination rate. It said the mobility indicators have returned to pre-pandemic levels and high-frequency indicators point to strength in the manufacturing sector. Last month Moody's Investors Service had changed the outlook on India's ratings to 'stable' from 'negative' and affirmed the foreign-currency and local-currency long-term issuer ratings and the local-currency senior unsecured rating at 'Baa3'.Īlso Read: Economic recovery now taking hold tax cut on petrol, diesel to augment purchasing power: RBI Governorįitch forecasted India's GDP to grow 8.7 per cent in the fiscal year ending March 2022 (FY22) and by 10 per cent in FY23.
However, the negative outlook on the rating reflects lingering uncertainty around the medium-term debt trajectory, particularly given India's limited fiscal headroom relative to rating peers," the ratings agency said in a release. "The country's rapid economic recovery from the Covid-19 pandemic and easing financial sector pressures are narrowing risks to the medium-term growth outlook. It said the rating balances a still-strong medium-term growth outlook and external resilience from solid foreign-reserve buffers, against high public debt, a weak financial sector and some lagging structural issues.
Fitch Ratings on Tuesday affirmed India's long-term foreign-currency issuer default rating at 'BBB-', with a 'negative' outlook, and said the economy would grow 8.7 per cent in financial year 2021-22.
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