New Delhi: Fitch Ratings is saying that if India can keep working on reducing its debt compared to the size of its economy (debt-to-GDP ratio), it might have a better shot at getting a higher credit rating. They think this could happen if India keeps up the good work on its big-picture money stuff (macroeconomic performance) and how it's doing with money coming in and going out of the country (external finances).
India's debt-to-GDP ratio is sitting at 56.8% right now, which is more than other countries with a similar credit score. But Fitch is giving a thumbs up to the government's latest budget that shows they're really trying to get that number down. They're especially happy about the government's plan to spend more on important areas that could help the economy grow.
Fitch is pretty impressed with the government's promise to shrink the fiscal deficit this year and the next, even though they're working with a bunch of different parties (coalition administration). And guess what? The budget's main focus on growing the economy by spending more on important projects gets two thumbs up from them.
When Fitch last checked in, they noticed that the government has set a new, lower goal for its fiscal deficit for the financial year 2025, aiming for 4.9% of GDP. That's a good thing because it's lower than the 5.4% they were expecting when they said India's current credit rating is 'BBB-' with a stable outlook back in January 2024.