New Delhi: Dashing the government's hope of improved credit rating, S&P on Wednesday retained India's rating at 'BBB-' with a stable outlook and ruled out any upgrade in two years, citing weak public finances.
"The stable outlook balances India's sound external position and inclusive policymaking tradition against the vulnerabilities stemming from its low per capita income and weak public finances," S&P Global Ratings said in a statement.
"The outlook indicates that we do not expect to change our rating on India this year or next, based on our current set of forecasts," it said.
'BBB-' indicates lowest investment grade rating.
S&P said the upward pressure on the credit ratings could emerge if the government reforms markedly improve India's fiscal performance and pushes down the level of net general government debt below 60 percent of the GDP.
Currently, government debt amounts to about 69 percent of the GDP.
S&P said improvements in policymaking continue to strengthen and flagged wide fiscal deficits, a heavy debt burden, and low per capita income as concerns.
Downward pressure on the ratings could re-emerge if growth disappoints as a result of stalling reforms or if interest rate-setting monetary policy committee does not achieve inflation targets.
A higher-than-expected deterioration in the nation's external liquidity position could also put downward pressure on ratings, S&P added.
The rating agency expects India's economy to grow 7.9 percent in 2016 with current account deficit at 1.4 percent of the gross domestic product. It also expects the RBI to meet its inflation target of 5 percent by March 2017.
S&P had last in September 2014 upgraded India's rating to stable from negative.