New Delhi: Fitch Ratings has affirmed the country’s sovereign rating, while keeping the outlook as negative and said the second wave of Covid may delay the recovery but is unlikely to derail it. The agency kept the rating at BBB (minus), saying 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 said the negative outlook reflects lingering uncertainty around the debt trajectory following the sharp deterioration in India’s public finance metrics due to the pandemic shock from a previous position of limited fiscal headroom. Wider fiscal deficits, and government plans for only a gradual narrowing of the deficit, put greater onus on India’s ability to return to high levels of GDP growth over the medium term to stabilise and bring down the debt ratio.
The second wave would impact economic recovery in the country and may cost it two percentage points of GDP, said Arun Singh, global chief economist at Dun & Bradstreet.
