Ratings agency Fitch has affirmed India's sovereign rating at 'BBB-' with a stable outlook, and forecasts 6.5 per cent of GDP growth in FY26, it said on August 25.

According to Fitch Ratings, India has a "strong record of delivering growth and improving fiscal credibility", which will drive improvements in structural metrics. The GDP forecast is unchanged from FY25, and is much higher than the median 2.5 per cent for the 'BBB' rating.

Notably, this comes after S&P Global on August 14 upgraded India's sovereign rating to 'BBB' from 'BBB-' and maintained the economic outlook as "stable". This was also its first upgrade for India in over 18 years.

Fitch keeps India's sovereign ratings stable at 'BBB-': Key highlights

• Fitch added that India's ratings are "supported by its robust growth and solid external finances" and that the country's economic outlook remains strong relative to peers, even as momentum has moderated in the past two years.
• The report added that if adopted, India's proposed goods and services tax (GST) reforms "would support consumption, offsetting some growth risks".
• "A strengthening record on delivering growth with macro stability and improving fiscal credibility should drive a steady improvement in its structural metrics, including GDP per capita, and increase the likelihood that debt can trend modestly downward in the medium term," Fitch said in a statement.

• Fitch, however, flagged fiscal metrics as a credit weakness, given the high deficits and debt compared to 'BBB' peers. "Lagging structural metrics, including governance indicators and GDP per capita, also constrain the rating," Fitch said.
• "India's general government debt burden is elevated at a Fitch-estimated 80.9 per cent of GDP in FY25, well above the 59.6 per cent 'BBB' median. We forecast a slight rise in debt to 81.5 per cent in FY26, as nominal growth slips," Fitch added.

Finance Ministry on India growth story

Responding to the S&P ratings jump, the Finance Ministry on August 14 said, "India has prioritised fiscal consolidation, while maintaining its strong infrastructure creation drive and inclusive growth approach, that has led to the upgrade. India will continue its buoyant growth momentum and undertake steps for further reforms to attain the goal of Viksit Bharat by 2047."

It added, "S&P's is the second sovereign rating revision this year. DBRS had recently upgraded India to BBB status."