India's ratings will be reviewed afresh by the Moody's Investor Service following the newly-elected government's budget presentation in July, a senior analyst said on Thursday. The rating will likely come under duress in case Prime Minister Manmohan Singh's government fails to cut back a widening budget deficit.

At present, Moody's has a Ba2 rating on India's local currency, and a Baa3 rating on the country's foreign currency debt. Though the agency has reiterated its unwavering outlook on India's sovereign ratings, it however said that the government's fiscal credibility has gone down.

Talking about the India's ratings to Dow Jones Newswires, Aninda Mitra - the Moody's Vice President - said: "We are waiting for the full budget to come out with our report. We are also watching the Cabinet formation."

Mitra said that the ratings have been greatly pressured by a sizeable deterioration in the fiscal position, and the failure of the government to make meaningful adjustments in fiscal policies would adversely affect the ratings.

The Moody's decision to review ratings noticeably comes after Fitch Ratings - which has given BBB- ranking to India's debt - said on May 14 that the new government is likely to accelerate spending to counter the country's slowing growth. As such Fitch expects the national budget deficit to be widened to over 10 percent of GDP for the second consecutive year!