The outlook on new rating is stable - this means that factors that can lead to a downgrade of India's rating and the ones that can upgrade its score are evenly balanced.
"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term, " said Soumya Kanti Ghosh, economist at the State Bank of India.
"Moody's upgrading India's Ratings is a reflection of India growth story and sound economic principles for a #NewIndia".
Sovereign credit rating indicates the level of risk faced by investors while investing in a country. In addition, it has changed to stable from positive the ratings outlook for IRFC; EXIM India and its London branch; HDFC Bank, its Bahrain and Hong Kong branches; as well as SBI and its Hong Kong, London, and Nassau branches. "Many who had doubts in their minds about India's reform process would now seriously introspect on their positions itself", he said.More news: Samsung to launch 3 new Galaxy S9 devices including an S9 mini
Finance Minister Arun Jaitley called the upgrade "a belated recognition of all the positive steps which have been taken in India in the last few years".
Chief Economic Advisor Arvind Subramanian, whose Economic Survey had a piece on the "poor standards" of the rating agencies, echoed these sentiments, noting that the upgrade was long overdue.
Moody's upgraded the nation's sovereign ratings from its lowest investment grade to a notch higher citing the recent series of government reforms which includes the Goods and Services Tax, the Aadhaar system of biometric accounts and measures taken to resolve bad loans plaguing the banking system.
On the fiscal prudence front, Jaitley said as India continues on the path of fiscal prudence, more stability has been brought into the economy.