Global rating agency Fitch Ratings has stated that India’s Sovereign Credit rating ‘BBB-‘ has been retained on Monday with a stable approach. The agency said that India’s strong economic growth rate and solid external financial position support this rating. According to PTI news, Fitch has predicted that India’s GDP growth rate in FY 2025-26 (FY26) will be 6.5%, which is the same as the previous year. This rate is much higher than the average 2.5% of the ‘BBB’ category countries, which makes India look comparatively strong.
According to the news, however, Fitch Ratings also admitted that in the last two years, there has been some lethargy in India’s economic pace. Despite this, the situation in India remains stronger than its equivalent countries.
Domestic consumption will be strengthened
The rating agency believes that if the improvement in GST rates proposed by the government is implemented, it will strengthen domestic consumption and will help balance the effects of economic recession. The government has proposed two-slab rates of 5% and 18% to make the GST system easier, while there are plans to implement a high rate of 40% on 5-7 items. Tax slabs of existing 12% and 28% can be removed from this.
India’s fiscal state still a weakness
Fitch says that improving stable economic development, macroeconomic stability and fiscal reliability can also lead to positive changes in India’s structural indicators. This can gradually reduce the country’s debt in the medium period. However, the report also warned that India’s fiscal state is still a weakness. India’s fiscal deficit and public debt are much higher than other countries of ‘BBB’ category.
Additionally, backwardness in areas such as governance indicators and per capita income also limits the country’s rating. It is noteworthy that recently on August 14, S&P Global Rating had improved India’s sovereign rating after 18 years and made it ‘BBB’ to ‘BBB-‘.
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