New Delhi, Aug. 26 -- Fitch Ratings on Monday maintained India's long-term foreign currency issuer default rating at 'BBB-' with a stable outlook, citing the country's strong growth prospects and solid external buffers, while warning that high debt and fiscal pressures continue to weigh on its credit profile. The decision follows S&P Global Ratings' recent upgrade of India's long-term rating to 'BBB', its first sovereign upgrade since 2007. Fitch, however, noted that elevated debt levels remain a structural constraint, even as revenue buoyancy and fiscal consolidation have narrowed deficits. "India's GG (General Government) debt burden is elevated at a Fitch-estimated 80.9% of GDP in FY25, well above the 59.6% 'BBB' median. We forecast a slight rise in debt to 81.5% in FY26, as nominal growth slips," Fitch said. "We expect debt to follow only a modest downward trend to 78.5% by FY30, even as nominal growth recovers to 10.5%. If nominal growth persists at below 10%, debt reduction could become challenging." Medium-term fiscal policy will now be anchored by the central government's new objective of reducing its debt to 50% (+/-1%) by FY31, from 56.1% in FY26, as per budget estimates, it added. To be sure, India's government debt climbed from Rs.71 trillion, or 51.5% of GDP, in FY16 to a projected Rs.200 trillion, or 56.1% of GDP, by FY26, according to budget documents. The pandemic years brought a sharp deterioration, with the debt-to-GDP ratio peaking at 61.4% in FY21 as the fiscal deficit widened. Since then, fiscal consolidation has helped lower the ratio, and the government aims to reduce it to about 50% by 2031. Economists and policymakers have long cited India's fundamentals and fiscal consolidation efforts in advocating higher ratings. A stronger credit rating would bolster India's standing in the global capital markets, offering cheaper and more predictable access to funds for both the government and private sector. Among the major rating companies, Moody's currently rates India at Baa3 with a stable outlook, while Fitch and S&P maintain BBB- and BBB, respectively, both at the lowest investment grade. Fitch projects India's economy will grow 6.5% in FY26, unchanged from the previous year and well above the 2.5% median for peers in the same rating band. It attributed the momentum to resilient domestic demand, rising public capital expenditure, and steady private consumption. The Reserve Bank of India has also projected 6.5% growth for FY26, reinforcing expectations of sustained expansion. "Domestic demand will remain solid, underpinned by the ongoing public capex drive and steady private consumption. However, private investment is likely to remain moderate, particularly given heightened US tariff risks," Fitch said. "There has been a notable slowdown in nominal GDP growth, which we forecast to expand 9% in FY26, from 9.8% in FY25." Fitch said escalating trade frictions could dampen investment sentiment, especially if Washington implements a threatened 50% tariff on Indian goods. While the direct impact would be modest, exports to the US account for just 2% of GDP, and the uncertainty could undermine investor confidence and India's efforts to attract supply-chain shifts away from China, it said....