Moody's ups ratings of SBI, HDFC Bank, EXIM India and IRFC

Prime Minister Narendra Modi swept to power three years ago on a promise to reform India's economy and create jobs for the growing youth populationMore

"We welcome (the upgrade) and believe that it is a belated recognition of all the positive steps taken in India in the last few years which have contributed to the strengthening of the Indian economy", Jaitley said.

Credit ratings indicate the general creditworthiness of an entity (such as a bank, corporate or sovereign) and the likelihood that it will meet its financial obligations in a timely manner. "I am sure that many who had doubts would now seriously introspect on their own positions", he said in a jibe at critics.

The announcement may kick-off a short-lived rally next week in the bond market, with the 10-year government bond yield likely to fall by 5 basis points, traders said.

Stating that reforms will foster sustainable growth prospects, the US-based agency said the government is mid-way through a wide-ranging programme of economic and institutional reforms.

The upgrade also comes just weeks after India improved its ranking by 30 places to 100th for the first time in the World Bank's ease of doing business report.

"Moody's upgrading India's Ratings is a reflection of India growth story and sound economic principles for a #NewIndia". The second quarter's numbers would be out by the end of this month.

The rupee surged as much as 1.1 per cent on Friday after worldwide rating agency Moody's Investors Service upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook to "stable" from "positive". S&P and Fitch Ratings have India a rung above junk.

At the same time, Moody's says India's high debt burden remains a constraint on the country's credit profile with the government's reform measures reducing the risk of a sharp increase in indebtedness. While GST and demonetisation have undermined growth over the near term, real GDP growth will rise to 7.5 per cent in 2018- 19 as disruption fades, it said. It also claimed that India's growth potential superseded that of many other sovereign nations.

"It is an upgrade that has happened after 13 years".

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