Rating upgrade certifies reforms are in right direction: Tyagi

Tyagi also said the rating upgrade to Baa2 would further boost investments including foreign inflows.

The New York-based Moody's today upgraded the sovereign credit ratings by a notch to 'Baa2' with a stable outlook citing improved growth prospects driven by economic and institutional reforms.

"It is a positive inflection point. In fact, government in the last three-and-a-half years has introduced so many reforms," Tyagi told reporters on the sidelines of a BSE conference on the Insolvency and Bankruptcy Code.

"Finally, the rating agency has acknowledged these measures and upgraded the ratings, though it should have been done long ago. It just certifies that whatever reforms have been brought in are all in the right direction," Tyagi added.

The rating upgrade comes after a gap of 13 years.

Moody's had last upgraded the sovereign ratings of the country to 'Baa3' in 2004. In 2015, the rating outlook was changed to 'positive' from 'stable'.

The 'Baa3' rating was the lowest investment grade a notch above 'junk' status.

Stating that reforms will foster sustainable growth, Moody's said government is mid-way through a wide-ranging programme of economic and institutional reforms.

Reacting to the news, the Sensex skyrocketed 414 points to 33,521 and the Nifty raced past 10,300.