Mumbai, Feb. 2: S&P Global Ratings today said India's heavy debt burden and weak public finances remained the key constraints to a rating upgrade even though the budget for 2017-18 showed the government's commitment to improving its fiscal performance.

At present, the international rating agency maintains the lowest investment grade rating of "BBB-" with a "stable" outlook on India.

In the budget, finance minister Arun Jaitley has set a fiscal deficit target of 3.2 per cent of GDP for 2017-18 and 3 per cent for 2018-19. The deficit in the current year is estimated at 3.5 per cent.

"India's 2017-18 budget illustrates the government's commitment to improving its fiscal performance over the medium term, despite the hit to near-term growth from the demonetisation initiative," S&P said.

Jaitley in his budget speech has said the Fiscal Responsibility and Budget Management (FRBM) review committee has favoured the lowering of the government's debt-to-GDP ratio to 60 by 2023 from 68.5. S&P said if the government's reforms markedly improved its general fiscal "out-turns'' so that this ratio fell below 60, "positive upward pressure on India's sovereign ratings may build".

"At the same time, we continue to see India's overall heavy burden and weak public finances as key rating constraints," it added.

In November, S&P had ruled out an upgrade in sovereign rating through 2017, stating that it wants to see more efforts to lower government debt to below 60 per cent of GDP.

The agency added that it did not expect revenues to rise enough to meaningfully lower the deficit over the medium term.

In the economic survey, chief economic adviser Arvind Subramanian had slammed global rating agencies for following "inconsistent" standards while rating India vis-a-vis China, saying they have not taken into account reforms measures such as the goods and services tax (GST), which is a "poor" reflection on their credibility.

S&P today denied this view and claimed that its rating methodologies were transparent and consistent across the globe.

"It is important to note that we apply the same methodology consistently for sovereigns across the globe and India is no exception. Our sovereign rating methodologies are transparent and are freely available on our website," S&P director for sovereign ratings Kyran Curry said in a webcast.

Subramanian said S&P had rated China six grades above India and held China's ratings steady since 2010 despite economic growth slowing to 6.5 per cent from 10 per cent.

In contrast, India's has moved in opposite direction and growth has increased.