Global rating agency Fitch has retained 'BBB-' sovereign ratings on India with a stable outlook. The agency stated that though India may have cleared the ground for progress on credit-supportive reforms, rating revision depends on the new government's revenue-strengthening or expenditure-saving measures.
The government during budget 2014-15 has set fiscal deficit target at 4.1 percent of GDP this year and decided to lower it to 3 percent of GDP by 2016-17. The rating agency noted that if this target is achieved, it would be big constructive for Indian economy. Meanwhile, Fitch is the only agency which has a stable outlook on the nation's credit rating, whereas other top global rating agencies such as Standard & Poor's and Moody's have affirmed negative outlook on India.
On GDP growth this fiscal, Fitch expects that Indian real GDP growth to pick up to 5.5 per cent in FY15 and 6.5 per cent in FY16 from 4.7 per cent in FY14. It further added that investment is likely to enhance gradually since election-related uncertainty has disappeared. Regarding the current account deficit, Fitch noted that policy rate hikes, high foreign reserves and measures such as curbing gold imports will contain CAD under target limits. Current account deficit (CAD) narrowed to $32.4 billion (1.7% of GDP) in FY14 as compared to $87.8 billion (4.7% of GDP) in FY13.
