Moody's Investors Service said on Wednesday that its assessment of the India's credit ratings will be determined mainly by the extent of its fiscal reforms, not recent revisions to its economic growth data.
The comments come a day after rival Standard & Poor's said the country must boost growth, cut its fiscal deficit and fulfil promises of financial and fiscal reforms in order to justify an upgrade in its credit rating.
The Government on Saturday will present its fiscal Budget for the new fiscal year starting in April amid high hopes that it will find a way to boost capital spending while exercising fiscal restraint.
"The upward revisions of GDP growth based on methodological and base year updates — highlight the strength of the economy, but do not impact Moody's overall assessment of the sovereign's credit profile," the agency said.
"Rather, fiscal and structural reform policies will determine the extent to which accelerating growth will buttress the sovereign credit profile."
Moody's added that rising private external debt levels and banking sector challenges will also continue to pose sovereign credit risks.
The country this month changed the way it measures its economy and said under the new methodology the economy expanded 7.5 per cent year-on-year during the last quarter, higher than 7.3 per cent growth recorded by China in the latest quarter.
As a result, Moody's said it now expected 7.5 per cent growth for the year ending in March 2015.
However, the new Government readings have left economists confused as it is at odds with other indicators such as industrial production, trade and tax collection figures, which suggest the economy is still suffering from slack.
Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook. That is in line with S&P and Fitch Ratings.