"India has not met its fiscal targets for two years running," Duff and Phelps sovereign analyst for India Shelly Chaddha said.The government used new accounting methodology to compute the current fiscal deficit target of 4.4 per cent of GDP and had the previous methodology been adopted, the deficit target would have been equal to six per cent of the GDP in 1999-2000, Chaddha said.

Persistently high fiscal deficits were likely to postpone the reduction of central government debt --more than 60 per cent of GDP in 1998-99 --and its very high interest burden, which was 49 per cent of government revenue receipts in last financial year, she said.

India's fiscal pressures intensified in 1998-99, leading to a deficit of 6.5 per cent of GDP against thetargeted 5.6 per cent, she said.On the government's decision to rationalise indirect tax structure, Chaddha said expansion of tax base would be crucial for strengthening the revenue capacity of the government.

Duff and Phelps currently rate India's foreign currency obligations at `bb+' (double B plus) and local currency obligations at `bbb' (triple B).The outlook for both ratings is currently stable, Chaddha added.The lacklustre performance of India's exports in the last three years was another major credit concern for Deff and Phelps, she said.

"Slow export growth places pressure on the external accounts and adversely effects the external debt repayment capacity of India," Chaddha said.However, a sizable international reserve position and low short-term debt exposure should support India's external liquidity position, Chaddha said, adding that strong political support would be essential for maintaining the medium-term fiscal reform effort.