New Delhi : Hailing India’s economy as stable, international ratings agency Fitch has upgraded its ranking to the investment grade ‘BBB-‘ (BBB minus) while recommending greater thrust on fiscal reforms.
“Fitch upgraded India to investment grade in August 2006. One year on, the growth story remains firmly intact, reinforced by strong net capital inflows and further advances in India’s external solvency and liquidity indicators,” Paul Rawkins, senior director, Fitch said in a statement.
“Fiscal consolidation, too, has continued to move ahead, narrowing the gulf between India and many of its rating peers,” Rawkins added.
Lauding its efforts in containing inflation, Fitch said this has become possible due to a tighter monetary policy. But, externally driven pressures on liquidity and rapidly escalating asset prices continue to pose challenges.
“Strong growth will be critical, but so too will be faster reform,” Fitch said adding that fiscal consolidation will need to remain at the forefront.
Besides urging the government to put greater focus on infrastructure and banking, it has also underlined renewed push in such areas as privatisation, labour market reform and the ease of doing business.
The global credit rating agency has also praised the growth in India’s gross domestic savings and investment ratios, as they are reflective of a growing economy and its ability to support high levels of public debt.