New Delhi, Nov 17: Moody's Investors Service today raised India's sovereign rating for the first time in 13 years, saying growth prospects have improved with continued progress on economic and institutional reforms.
The US-based agency upped India's rating to Baa2 from Baa3 and changed its rating outlook to 'stable' from 'positive', saying the reforms will help stabilise rising levels of debt.
Top officials of the government hailed the rating upgrade by Moody's as "long overdue" and hoped others such as S&P and Fitch will follow suit as it presses ahead with steps to ratchet up growth.
Moody's cited the recently-introduced Goods and Services Tax (GST) that removed inter-state barriers to ramp up productivity, improvements to the monetary policy framework, measures to clean up non-performing loans and efforts to bring more areas into the formal economy.
Baa2 rating means investment grade with moderate credit risk, which is two notches above the junk grade.
The one-level shift from the lowest investment-grade ranking puts India in the league of the Philippines and Italy.
Moody's had last upgraded India in 2004. It had in 2015 changed rating outlook to 'positive' from 'stable'.
Baa3 rating was the�lowest investment grade -- just a notch above 'junk' status.
The rating upgrade comes within weeks of the World Bank handing a 30-place jump to India on its ease of doing business ranking to place it at 100th rank.
Chief Economic Advisor Arvind Subramanian said the rating upgrade was "long overdue" and is a recognition of reforms like GST, bank recapitalisation plan, bankruptcy code and macro-stability.
The government, he said, "is going to do what it has to do on the domestic front -- employment growth, economic growth, reviving investment", he told reporters here.
Economic Affairs Secretary Subhash Chandra Garg said the upgrade has recognised government efforts on fiscal deficit, consolidation and debt control.