Ratings agency Moody's on Tuesday maintained its outlook on India's sovereign rating at 'stable', but also warned that the country's rating was constrained by several credit challenges.

The Congress-led UPA government received much-needed relief from Moody's decision to maintain its outlook on India's Baa3 rating at stable. In its `Credit analysis on India' report, the global ratings agency said India's sovereign rating was supported by credit strengths, such as a large, diverse economy, strong growth of gross domestic product, comparatively higher rates of savings and investments, but it also pointed out that there were several credit challenges that constrained the rating.

The agency held challenges like poor social & physical infrastructure, high government deficit and recurrent inflationary pressures responsible for the constraints on the country's rating.

In its `Credit analysis on India' report, the agency said, "The rating is constrained by the credit challenges posed by India's poor social and physical infrastructure, high government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment."

Moody's also cautioned that the country's persistent fiscal deficit has also been a rating constraint for long. Though the government has announced some strong measures, such opening of retail and aviation sectors to foreign investors, to accelerate economic growth, yet Moody's cautioned the government that growth may remain subdued due to delays in the implementation of the decisions.