Moody's has raised India's growth projections for 2024 and 2025, citing improving rural demand, while Fitch affirmed the country’s sovereign credit rating. Moody's now expects India's economy to grow by 7.2% in 2024, up from 6.8% and 6.6% in 2025, compared to 6.4% earlier. The agency credits these revisions to robust growth in the industrial and services sectors, with the services PMI consistently above 60. Household consumption is anticipated to rise as inflation nears the RBI's target, with rural demand showing signs of recovery due to favourable agricultural conditions amid above-normal monsoon rainfall. Moody's also expects the capex cycle to gain momentum, driven by rising capacity utilization, positive business sentiment, and continued government investment in infrastructure.
Fitch, meanwhile, has affirmed India's long-term foreign currency issuer rating at 'BBB-' with a stable outlook, citing a strong medium-term growth outlook. The agency expects this growth to enhance India's structural credit profile, including its share of global GDP and solid external finance position. Fitch also noted improved fiscal credibility, supported by adherence to deficit targets, increased transparency, and robust revenues, which could lead to a modest decline in government debt. However, the agency cautioned that fiscal metrics remain a credit weakness, with high deficits, debt, and debt service burdens compared to 'BBB' range peers. The lagging structural metrics, such as governance indicators and GDP per capita, continue to weigh on the rating.
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