New Delhi: fixing faith in the unrelenting development on economic front backed by institutional reforms like GST and Note ban, Moody`s Investor Services lifted the Government of India`s local and foreign currency debt ratings to Baa2 from Baa3.

The rating agency informed that the reforms will get better the business climate in the nation and elevate productivity.

Moody`s also altered its ranking outlook to firm from positive, saying that at the Baa2 level the risks to India`s credit profile were mostly balanced.

Moody`s report said the recently-introduced goods and services tax (GST), a landmark modification that turned India`s 29 states into a single customs union for the first time, will encourage productivity by removing barriers to interstate trade.

"In the period in-between, while India`s high debt burden remains a constraint on the country`s credit profile, Moody`s considers that the reforms put in place have reduced the risk of a spiky increase in debt, even in potential downside scenarios," the rating agency quoted in a statement.

Moody`s look forward to India`s real GDP growth to restrained to 6.7 percent in the fiscal year ending in March 2018 from 7.1 percent a year earlier.

Moody`s also raised India`s local currency senior unsecured debt rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3.

The governance of Prime Minister Narendra Modi relieved tax necessities last month for small- and medium-sized companies in response to emergent criticism of its economic stewardship.

With inputs from Reuters