Fitch Ratings has restored India’s sovereign debt rating back up to "stable," overturning a "negative" downgrade it made a year ago.

The decision is based on the Indian government's acting to trim its budget deficit and remove barriers to investment and economic development, said the credit agency in a statement.

Fitch cited an encouraging 4.9 percent fiscal deficit in fiscal year 2013, down from a 6 percent deficit, when the agency issued its "negative outlook" verdict on India in June 2012.

But the agency also warned that slower GDP growth rates in the Indian economy and a rise in the country’s public debt could return it to a negative rating.

It said that India is challenged by high public debt, at 64 percent of GDP in fiscal 2013, visibly higher than its peers in the BB and BBB rating band for government bonds.