Where India Stands on Ratings

The BBB-minus grade is the lowest investment-grade notch on Fitch’s scale. While another global rating agency recently moved India to ‘BBB’, Fitch maintained the current level. Separately, another agency announced in May that it had upgraded India’s rating to BBB, and has kept it unchanged since.

Growth Outlook Unchanged

Fitch kept its near-term growth forecast at 6.5% and expects India’s GDP to expand by around 6.4% in the medium term. The agency pointed to continued government capital expenditure, a gradual revival in private investment, and a large working-age population as key supports for the outlook.

GST Rationalisation Seen as Supportive

The agency viewed proposed GST rate rationalisation positively, saying streamlining could bolster consumption and temper some growth risks. However, it flagged that major structural reforms—especially in land and labour—may be politically difficult at this stage. Despite progress on multiple free-trade agreements, trade barriers remain meaningful, it added.

Constraints on the Rating

Fitch highlighted India’s higher fiscal deficit and elevated public debt compared with typical BBB peers as rating constraints. It also said low per-capita income continues to limit the rating headroom. The agency indicated it will track fiscal consolidation, investment momentum, and reform execution while assessing future rating actions.

How These Ratings Are Used

Sovereign credit ratings are widely used by global investors, banks, and policymakers to gauge the financial strength and risk profile of a country. A stronger rating makes it cheaper for a government to borrow in international markets, as lenders feel more confident about repayment. These ratings also influence the cost of capital for companies in that country, since many global funds and institutions use sovereign ratings as a benchmark for investment decisions.

What the BBB-Minus Rating Represents

Fitch’s BBB-minus is the lowest rung of the investment-grade category. It signals that India is considered capable of meeting its debt obligations, but still carries relatively higher risks compared to countries with stronger grades such as A or AA. Falling below BBB-minus would push India into “junk” status, which could make foreign borrowing costlier and reduce foreign investor interest. Remaining investment grade, however, reassures lenders and investors that India’s fundamentals are stable and repayment risk is low in the near term.

Global Rating Scale — Where India Stands