"The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness", the rating agency said in a statement.
The agency said it was lifting India's rating to Baa2 from Baa3 and changed its rating outlook to stable from positive as risks to India's credit profile were broadly balanced.
Moody's has also raised India's long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3.
Jaitley said: "It is extremely encouraging that there is an global recognition and the fact that this recognition merely furthers our determination to follow the track we have embarked upon". Listing the series of reforms which led to the upgrade, he said while demonetisation took the economy towards greater formalisation and digitisation, use of Aadhaar ensured targeted delivery of government benefits. "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.
He also lauded the smooth transition of the Goods and Services Tax (GST).
The upgrade came after 13 years.
Maintaining that the upgrading was based on New Delhi's "wide-ranging programme of economic and institutional reforms", Moody's simultaneously changed the outlook for the country's rating to stable from positive and upgraded India's local and foreign currency issuer rating to Baa2 from Baa3. All these steps which constituted major reforms are directional in nature.
Taking on opposition, Jaitley said those who had doubts about the government's reforms must introspect.
Finance Minister Arun Jaitley on Friday termed the upgrade of India's credit rating by Moody's after a gap of 13 years as a "belated recognition" of reforms in the last few years, and vowed to continue them while maintaining fiscal discipline.
Moody's upgrade, its first since January 2004, moves India's rating to the second-lowest level of investment grade.