Little fiscal headroom for govt to respond to future shocks: Fitch

Rating agency says it revised Outlook on India's rating to Negative from Stable in June 2020, partly due to its assumptions about pandemic impact on public finance metrics

Fitch Ratings on Monday cautioned that the Indian government has little fiscal headroom at its disposal to respond to possible shocks to growth given the country's lowest investment grade credit rating with a negative outlook.

“India’s public debt/GDP ratio, at about 87 per cent in FY21, is well above the median of around 60% for ‘BBB’ rated sovereigns. We revised the Outlook on India’s rating to Negative, from Stable, in June 2020, partly owing to our assumptions about the impact of the pandemic on public finance metrics. The government has little fiscal headroom at its current rating level to respond