Moody's also lowered growth forecasts for many Asia Pacific (APAC) sovereigns, citing that subdued global growth, exacerbated by weaker demand from China.
"We have also reduced our projections for India to 7 percent in 2015 and 7.5 percent in 2016, from 7.5 percent and 7.6 percent based on high frequency indicators suggesting that the recovery in industrial output and investment is slow, and bank credit growth still subdued," it said.
India's economy grew at 7 percent in the June quarter of the current fiscal. The government expects economy to grow at 8-8.5 percent in the fiscal ending March 2016.
It said for a number of economies in the region, the fall in oil prices has helped to reduce current account deficits.
Moody's said India’s current account deficit (CAD) has narrowed significantly from 4.8 percent in 2012 to 1.4 percent in 2014. "We expect this trend to continue, supported by lower oil import costs."
"The risk of a weaker monsoon and potential for higher food price inflation narrowed the scope for more significant monetary easing in the first half of the year. Nonetheless, our expectation is that despite its slower than anticipated pace, the direction of recovery is positive, which is reflected in our 2016 forecast," Moody's said.


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