India's medium-term growth outlook critical in ratings, says Fitch

Agency says loosening of fiscal policy to support economic recovery will lead to a rise in public debt, adding that debt-to-GDP trajectory is core to its sovereign rating assessment

Global rating agency Fitch said today that India’s medium-term growth outlook will assume a more critical role in sovereign assessment due to higher deficits and a slower consolidation path.

"The Union Budget (for 2021-22) points to a loosening of fiscal policy to support ongoing economic recovery from the pandemic. It will consequently lead to a rise in public debt. The debt as per cent of Gross Domestic Product (GDP) trajectory is core to our sovereign rating assessment, Fitch Ratings said in a statement.

The agency had revised the outlook on India’s ‘BBB-’ rating to negative from stable in June 2020, partly owing