Fitch, the global rating agency, has upgraded India's outlook to stable from negative and has also affirmed its sovereign rating at 'BBB (negative)'. The revision reflects the measures taken by the Government to check budget deficit, progress in removing some structural impediments to investment and economic growth.
The central government fiscal deficit was 4.9 % in 2012-13 compared with 5.7 % in 2011-12 and Fitch's forecast when it had placed India's ratings on negative outlook in June 2012 of close to 6 %. Fitch expects the Government to broadly meet its 2013-14 Budget deficit target of 4.8 %. It also feels that the authorities have begun to address those factors that have weaken the investment climate and growth prospects, notably regulatory uncertainty and delays in government approvals.
Despite this, the investment climate could benefit from further reforms such as the new land acquisition Bill, liberalisation of insurance and pension sectors, which are pending parliamentary approval. Addressing the structural issues in the power and mining sectors would further boost investor confidence.
Fitch has forecasting a modest recovery with real GDP growth at 5.7 % and 6.5 % in 2013-14 and 2014-15 respectively.