Bringing cheer to the government struggling to arrest rupee's slide, global rating agency Fitch on Wednesday revised India's sovereign credit outlook to stable from negative.
Taking note of the government's efforts to contain fiscal deficit, Fitch Ratings revised India's Outlook to Stable from Negative and affirmed 'BBB-' rating.
"The revision of the Outlook to Stable reflects the measures taken by the government to contain the budget deficit, including the commitments made in the FY'14 budget, as well as some, albeit limited, progress in addressing some of the structural impediments to investment and economic growth," the agency said in a statement.
Fitch further said it expects the economy to recover after real GDP grew just 5 per cent in 2012-13 versus 6.2 per cent in the year ago period.
India's economic recovery, however, is likely to remain slow until a healthier investment climate is created, which helps lift potential growth again, it said.
"As a result, Fitch is forecasting only a modest recovery with real GDP expected to expand 5.7 per cent and 6.5 per cent in FY14 and FY15 respectively," Fitch said.
Fitch along with Standard and Poor's had earlier threatened to downgrade India's rating to junk grade in absence of steps by government to contain deficits and promote investment.
Rupee on Tuesday touched historic low of 58.96 against the dollar. But the Indian rupee bounced back on Wednesday, gaining 60 paise to close at 57.79 against the US dollar.
A concerned government has given indications to investors that it would take more steps to increase foreign investments in the country to stabilise rupee.
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