According to global rating agency Moody's, India's fiscal health, growth in infrastructure and regulatory constraints in investment will determine the country's credit rating outlook.
Moody's has maintained a stable outlook on India's 'Baa3' credit rating. Also read BJP win to boost sentiment, policies to determine rating
Policy uncertainty may ease after the NDA's thumping victory in the recently held general elections as the coming into power of the growth and investor friendly BJP party may boost sentiment as long-stalled reforms are set into motion and investment revives.
"The significant parliamentary majority won by the BJP-led NDA in India is likely to sustain the investor sentiment which has recently boosted equity indices and the rupee," Moody's said, the PTI reported.
However, economic growth this fiscal may be affected by the El Nino condition which may hurt monsoons, crimping agricultural output, Moody's warned.
"We expect GDP growth to continue to be below potential, at about 5 per cent this year, and the possibility of a sub-par harvest due to El Nino effects poses downside risks," the rating agency added, the PTI reported.