Global rating agency Moody's has upgraded India's rating outlook to "stable" from its earlier "negative" outlook, though at the same time it has affirmed its Baa3 rating.
The decision indicates that the Indian economy is moving towards an upwards trajectory.
The rating agency said that economic recovery is in progress as activity is gradually picking up and spreading to other sectors as well.
Moody's had last year downgraded India's rating from Baa2 to Baa3, observing that it could face difficulties in implementing policies to mitigate risks of a sustain period of low growth and deteriorating fiscal position.
In a statement issued by the rating agency, it said that though risks from a high sovereign debt burden remain, an improvement in economic conditions will gradually ease concerns.
The agency sees country's real GDP surpassing 2019 levels during the current financial year and expects growth at 9.3 per cent during 2021-22 and at 7.9 per cent in 2022-23.
"Downside risks to growth from subsequent coronavirus infection waves are mitigated by rising vaccination rates and more selective use of restrictions on economic activity, as seen during the second wave," it said.