Mumbai: India’s weak fiscal position and low income levels are holding back the country’s credit profile even as political stability after the general elections in May last year have created a conductive atmosphere for reform, global credit rating agency Standard & Poors (S&P) said on Monday.

S&P expects India’s GDP growth to be nearly 7% by 2017, but with a projected per capita income of $2,404 by then would still mean that income in India is still about a third of similarly rated countries.

The rating agency said India’s credit metrics are “weak" for its BBB- rating as it compared India to other emerging market peers namely, Brazil, Colombia, Indonesia, the Philippines, South Africa and Uruguay.

The report said that India stands a better chance of closing its gap with other similar rated emerging market countries because of a strong mandate for the present government.

“Higher growth in real per capita gross domestic product (GDP), stronger fiscal and debt metrics and an improved external position or monetary policy setting are needed to enhance the sovereign’s creditworthiness," S&P analyst Agost Benard was quoted as saying in the report.

The report names India’s high savings and investment rates and its favourable demographics as positives to achieve higher economic growth. However, the government’s ability to fulfill its reform promises will be critical, Bernard said.

The report comes on the first day of the Indian parliament’s crucial budget session, which will be the first such full session of the new government. Expectations are high that the government will reveal a road map for fiscal reforms.

S&P had raised India’s rating outlook to stable from negative in September 2014 citing the strong mandate for the government which gave more room for reforms.

The improvement in outlook was the first positive move by global rating agencies after India’s rating was reduced to BBB- in April 2012.

“We expect the government’s fiscal consolidation plan of progressively lower deficits to ease the debt and interest burden. However, improvements in India’s weak fiscal balance sheet are likely to be gradual," said Benard from S&P.