Fitch Ratings slashed its FY22 growth forecast for India from 10% to 8.7%, citing the severe second COVID-19 wave, which it said would ‘delay rather than derail’ economic recovery. Accordingly, it raised the growth forecast for FY23 to 10% from 8.5% estimated earlier.
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The ratings agency has also retained the negative outlook on India’s sovereign rating BBB-, citing greater uncertainty over the country’s debt levels due to a sharp deterioration in public finances triggered by the pandemic shock.
“India’s 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 factors,” it firm said in its sovereign credit overview for the Asia-Pacific. The agency said higher public debt trajectories were the reason it had retained the ‘negative’ outlook for India as well as Japan and Australia.
