Strong external liquidity. Good growth prospects. Fiscal inflexibility, due to high debt and large deficits. High contingent liabilities. Slow pace of budgetary consolidation. The sovereign ratings on India are supported by its resilient external position, as illustrated by the country's strengthening liquidity, which is likely to improve in the coming years. Robust foreign exchange reserves, which exceed 2000% of short-term debt, mitigate the risk of volatility in external confidence. The strong growth in export earnings, particularly from the service and manufacturing sectors, as well as non-debt foreign capital inflows, should offset the impact of rising imports from the surge in oil prices. As a result, India's external debt and debt service burden is expected to shrink, with this trend likely
