Public disagreements between the government of India and the Reserve Bank of India (RBI) are starting to get on the radar of international investors, said global rating agency Fitch Ratings.

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Such disagreements between policymakers do not make investors “entirely comfortable”, said James McCormack, managing director and global head – sovereign & supranational ratings at Fitch Ratings, but added that the issue was not at a stage yet where it was going to be disruptive for global investors.

Such instances are playing out in a number of countries, and it was not something that is isolated to India, McCormack told CNBC-TV18. He added that investors would have to start getting comfortable with similar debates, as 2019 is likely to see more of these playing out between governments and central banks in other countries.

As long as the debate worked towards policy solutions, and not confrontations, then the situation could be comfortable, McCormack said.

Overall, Fitch Ratings, which has not upgraded India’s sovereign rating (currently at BBB-) in over a decade, said its outlook on the country remains stable. Fitch believes that India’s growth rate potential is by far the strongest among large emerging market economies, and it will continue to grow faster than China in the foreseeable future.

While India has a strong growth story, the worry, remained over the high level of public debt, which has not come down over the past few years despite good growth rates, Fitch added.

McCormack said that while the central fiscal balance was improving, the states’ fiscal position was only getting worse, and the relatively high consolidated public debt did not augur well for India from a ratings' perspective.

An improvement in public debt profile could be a potential trigger for a rating upgrade, added McCormack, and the reverse could even prompt a downgrade.

On the global front, the sovereign head at Fitch said that while the trade war tension between the two largest economies, US and China, is the most concerning risk immediately, the continued strength of the US dollar could prove to be the biggest risk in 2019. Latin America, Mid-Eastern African countries could see potential rating pressures with the dollar continuing to gain strength, McCormack said.

First Published:Nov 20, 2018 10:02 PM IST