MUMBAI: Global ratings agency ARC today reaffirmed the country’s sovereign rating at `BBB+’ with a stable outlook on expectations of accelerated growth, lower current account deficit and fiscal consolidation. 

“The stable ratings reflect our expectations for accelerating growth over the near and medium-term,” the ratings agency said in a note. 

The faster expansion puts India on a higher growth platform and reinforces its much more favourable growth story compared with its peers, it said. 

The government recently revised the computation of GDP numbers under which the FY14 growth moved up to 6.9 per cent, from 5 per cent under the old calculation, and expectation for FY15 expansion is 7.4 per cent. 

The high amount of NPAs, which grew to 4.5 per cent in September 2014 as against 4 per cent in March 2014, was identified by the agency as the “main challenge”. 

“Asset quality weaknesses in the banks stymie credit growth necessary to put the country on an investment-led growth path. Weak financial sector and heavily indebted government sector are its main rating constraints,” it said.

On critical fiscal deficit front, which has led other rating agencies to advice caution, ARC said announcement in last month’s Budget of a slower fiscal consolidation is in line with its expectations.

The foreign currency rating has been affirmed at `BBB+’ with a stable outlook and the local currency at “A-“, the recently launched London-based agency, which has Care Rating as its domestic partner said.

“The Budget for FY16 is in line with our expectations for a slow fiscal consolidation mindful of cementing India’s robust growth path,” it said.