Two months after cutting India's credit rating outlook to negative, Fitch today said macroeconomic situation remains weak as growth is slow and inflation pressures are strong.
"The current macroeconomic outlook looks weak, as real GDP continues to slow and inflation pressures remain strong," the agency said in a report on sovereign ratings across the Asia-Pacific.
Fitch today said the country's external position is a "rating strength" with reserves of over USD 290 billion at the end of June which will suffice for six months of external payments.
"This still provides a key buffer during periods of higher global risk aversion," it added.
Fitch also noted that an acceleration in economic reforms and an improving investment climate are the upsides, while a lax fiscal policy, especially in the run-up to the 2014 general elections, is the downside risk.
Fitch in June had lowered India's credit rating outlook to negative, citing corruption, inadequate reforms, high inflation and slow growth as reasons for the revision
Its rival S&P had threatened to downgrade the rating to junk status.
According to a recent report, the finance ministry is planning to present the country's strengths to the rating agencies when they come calling this month, to avoid downgrade.
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