Service has cut India's GDP growth
forecast to 7.3 per cent in 2018, from previous forecast of 7.5 per cent due to
higher oil prices and tighter financial conditions.
"The Indian economy is
in cyclical recovery led by both investment and consumption. However, higher
oil prices and tighter financial conditions will weigh on the pace of
acceleration. We expect GDP growth of about 7.3 per cent in 2018, down from our
previous forecast of 7.5 per cent," the report said.
It, however, kept growth expectation
for 2019 remains unchanged at 7.5 per cent.
Moody’s further said: "On the
domestic front, growth should benefit from an acceleration in rural
consumption, supported by higher minimum support prices and a normal monsoon.
The private investment cycle will continue to make a gradual recovery, as twin
balance-sheet issues -- impaired assets at banks and corporates -- slowly get
addressed through deleveraging and the application of the Insolvency and
It said ongoing transition to the new Goods and
Service Tax regime could also weigh on growth somewhat over the next few
quarters, which poses some downside risk to its forecast.
"However, we expect these issues to
moderate over the course of the year," it said.