Fitch Keeps India BBB Rating, Stable Outlook; Fiscal Weakness Noted

Fitch Ratings reaffirmed India’s Long-Term Foreign-Currency Issuer Default Rating at BBB with a stable outlook, citing a strong track record of growth and solid external finances while warning that the government’s fiscal metrics remain a credit weakness. The agency kept its GDP growth forecast for the fiscal year 2025-26 at 6.5%, well above the BBB median, and noted that domestic demand should stay solid on the back of ongoing public capital expenditure and steady private consumption. Yet it underscored that private investment is likely to stay moderate, in part because of heightened uncertainty from U.S. tariff policies.

The rating agency emphasized that India’s macro stability and improving fiscal credibility could gradually lift structural metrics, including GDP per capita, and increase the likelihood that debt could trend downward over the medium term. However, Fitch also highlighted a high general-government deficit and rising debt relative to GDP as persistent weaknesses that constrain the overall credit profile. In its assessment, the combination of strong growth and external resilience coexists with a fiscal path that remains more fragile than peers’ on a net borrowing...