Fitch affirms India's BBB- ratings; outlook stable
Ratings agency Fitch Friday affirmed India's long-term foreign and local currency ratings at 'BBB-', the lowest investment grade and said the outlook is stable.
The issue ratings on India's senior unsecured foreign and local currency bonds were also affirmed at 'BBB-'.
The country ceiling was affirmed at 'BBB-' and the short-term foreign currency issuer default ratings at 'F3' which also is an indicator of poor performance.
India's sovereign ratings benefit from relatively high real GDP growth: the five-year average is 6.7 percent, compared with the median of 3.2 percent for peers in the 'BBB' rating category (sovereigns rated 'BBB-', 'BBB' and 'BBB+'), Fitch said in a report.
"However, the Indian economy has lost much of its dynamism in recent years and the average is coming down," it said.
Fitch forecasts real GDP growth to rise from 4.7 percent in the financial year ended March 2014 to 5.5 percent in 2014-15 and 6 percent in the subsequent year.
The course of the Indian economy is uncertain in light of the ongoing parliamentary elections, with the results due to be announced May 16, 2014, it said.
Once the next government starts implementing its economic policies, it will become clearer whether the economy can return to a higher sustainable growth path or it will remain stuck at current levels.
A policy push that includes structural and governance reforms, fiscal consolidation and efforts to rein in inflationary pressures would likely require a coherent coalition with a strong electoral mandate, the ratings agency added.
(Posted on 11-04-2014)
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