Fitch Ratings raised its outlook for India's long-term foreign currency Issuer Default Rating (IDR) to "stable" from "negative" on Friday, citing diminished downside risks to medium-term growth.

The upgrade brings its view of Asia's third-largest economy in line with Standard and Poor's and Moody's ratings and outlook.

S&P has a 'BBB-' rating on India, with a stable outlook, while Moody's has a Baa3 rating and stable outlook. Fitch maintained its rating of BBB- on India.

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"India's economy continues to see a solid recovery from the COVID-19 pandemic shock," it said in a statement.

The ratings agency said risks to the country's medium-term growth lessened due to rapid economic recovery and easing financial sector weakness, despite near-term headwinds from the global commodity price shock.

"High nominal GDP growth has facilitated a near-term reduction in the debt-to-GDP ratio," Fitch said.

Fitch lowered India's economic growth for 2022/23 to 7.8% from the 8.5% it had forecast in March, saying the inflationary impacts of the global commodity price shock were dampening some of the positive growth momentum.

However, Fitch's projection was ahead of Reserve Bank of India's (RBI) projection of 7.2%. In 2021/22, India's economic growth was 8.7%.

Fitch expects inflation to average 6.9% in the current fiscal year due to a rise in global commodity prices and said it expects RBI to continue to raise repo rates to 6.15% by next fiscal year.

Earlier this week, India's central bank raised its repo rate by 50 basis points to 4.90%, the second hike in two months, while raising its inflation forecast to 6.7% from 5.7%.

Fitch said external risks remain relatively well-contained despite high oil prices due to RBI's over $600 billion forex buffer. It forecast current account deficit of 3.1% of GDP in 2022/23 from 1.5% in the last fiscal year.