Global agency Fitch Ratings today said it has retained the 'BBB-' sovereign rating - the lowest investment grade - on India and a revision will depend on the government's efforts to usher in bold reforms.
The agency has also retained 'stable' outlook for the country's ratings.
Fitch said the Budget 2014-15 announced by the new government is positive of credit-ratings and further revision will be dependent on the government's willingness to make difficult choices.
"India may have cleared the ground for progress on credit -supportive reforms, but the government's willingness to make difficult choices remains to be tested," Fitch said in a conference call from Hong Kong.
Apart from Fitch, Moody's also holds a stable outlook on the country's sovereign ratings. The present 'BBB-' rating is the lowest investment grade rating.
Last year all the rating agencies had threatened a downgrade citing worsening macroeconomic conditions led by a free-falling rupee and a ballooning current account deficit.
The agency had affirmed 'BBB-' rating for the country in April this year, reflecting the balance between high foreign- exchange reserves and real GDP growth compared with its peers, and weak fiscal balances and low governance standards.
Fitch further said it expects the real GDP growth at 5.5 per cent in the current fiscal and 6.5 per cent in FY16.
The government has kept the fiscal deficit target at 4.1 per cent of GDP for the current fiscal and sees it narrowing to 3 per cent by FY17.
"The fiscal deficit target would be constructive if achieved, while further revenue-strengthening or expenditure- saving measures seem needed to reach these targets," the rating agency said.
Fitch said it needs to be seen how the goods and services tax (GST) roll-out will impact the revenues and in case of any shortfall how the government will manage to improve its revenues.
It said the current account deficit was a concern for investors in the 2013, but has narrowed due to policy rate hikes and measures such as those to curb the import of gold.