Mumbai: Global rating agency Moody's Investors Service has kept India's foreign currency rating and local currency rating unchanged at Baa3 and Ba2, respectively, but warned the government of risks from a further rise in oil prices and inflation.

While the risks confronting the economy have grown, it has not yet reached the extent that they can threaten the country's ratings, Moody's said  in a report on its outlook for India's sovereign ratings.

''Higher oil prices and the lack of adequate fiscal policy reactions amidst high pent-up price pressures are putting the burden of macro-economic adjustment on the monetary authorities,'' Moody's said.

Moody's, however, said much will depend on improving the fiscal policy response to strong price pressures.

''If the fiscal policy response remains inadequate amidst heightened external shocks or resulted in an intensification of domestic inflation, then ratings pressure for a change in India's sovereign ratings outlook, from stable to negative, would increase,'' the report said.

Greater government borrowing needs, although may not lead to a material deterioration of its key credit profile, may prevent an improvement in the current fiscal, Moody's said in the report.

Moody's attributed government's fiscal difficulties partly to its inability to raise retail fuel prices and reduce the growing, off-budget fiscal cost of reimbursing oil marketing companies.

''While Moody's overall assessment is that the current constellation of risks is captured in the prevailing stable outlook, downside pressures could emerge," Moody's said.

The sources for these risks would be twofold: ''First, they could involve deterioration in the government's general debt metrics and its access to external liquidity, given intensified commodity price shocks and an inadequate fiscal response," Moody's said.

''Secondly, such pressures could be due to the rising risk of fiscal spillovers to India's external accounts," it added.

''Such spillover, if large enough, could weaken the case for the two-notch gap between its foreign currency and local currency ratings," Moody's said.

Last month, another global rating agency Fitch downgraded India's credit outlook from stable to negative.