Fitch rates Kerala BB

Fitch Ratings said it assigned first-time long-term foreign- and local-currency issuer default ratings of BB to the state of Kerala.

The outlook is stable.

The ratings reflect the state's high political and fiscal hierarchy, adequate policy consistency and execution and sound socio-economic development in a national context, Fitch said.

The ratings are constrained by Kerala's limited fiscal flexibility due to high committed expenditure and reliance on debt to finance its operating deficit and capital expenditure, the agency said.

Kerala's economic growth is driven by the construction, transport, storage, communication, trade, tourism and real estate sectors, Fitch explained, but it faces inadequate industrial development, private investment and physical infrastructure and high dependence on the external economies of other states and countries.

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