Moody's Investors Service has affirmed India's long-term local and foreign-currency sovereign ratings and retained the outlook at stable, it said in a statement on Friday.
India's long-term local and foreign-currency issuer ratings and the local-currency senior unsecured rating remains at Baa3, while the other short-term local-currency rating stands at P-3, it said.
"The affirmation and stable outlook are driven by Moody's view that India's economy is likely to continue to grow rapidly by international standards, although potential growth has come down in the past 7-10 years," it said.
"High GDP growth will contribute to gradually rising income levels and overall economic resilience. In turn, this will support gradual fiscal consolidation and government debt stabilisation, albeit at high levels."
Moody's said the country's financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure.
A lasting upward shift in global and domestic interest rates highlights the risks stemming from a high debt burden and weak debt affordability, which have been long-standing features of India's sovereign rating and Moody's expects them to remain, it said.
"The Baa3 rating and stable outlook also take into account a curtailment of civil society and political dissent, compounded by rising domestic political risk."