Moody's attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation.
"India's growth forecast for fiscal year 2019 (FY20) is lowered to 6.5 per cent after growth slowed markedly to 5 per cent in the first quarter, April–June," said the Asian Development Outlook (ADO) 2019 Update.
The International Monetary Fund (IMF) in July projected a slower growth rate for India in 2019 and 2020, a downward revision of 0.3 per cent for both the years, saying its Gross Domestic Product (GDP) will now grow respectively at the rate of 7 per cent and 7.2 per cent, reflecting a weaker-than-expected outlook for domestic demand.
Moody's Investors Service on Friday cut India's GDP growth forecast for 2019 calendar year to 6.2 per cent from the previous estimation of 6.8 per cent.
A day before the Union Budget, Union Finance Minister Nirmala Sitharaman tabled the Economic Survey in both Houses of Parliament Thursday. The Survey projected the GDP growth for 2019-20 at 7 per cent, up from 6.8 per cent in the previous fiscal.
Last month, official data showed that economic growth slowed down to a five-year low of 5.8 per cent in January-March, pushing India behind China, due to poor showing by agriculture and manufacturing sectors.
The growth was 8.2 per cent in 2016-17, the year in which the government demonetised high-denomination currency notes of Rs 500 and Rs 1,000.
Earlier, the CSO in its advance estimate had pegged the GDP growth rate for 2018-19 at 7.2 per cent.
India forecasts 2018-19 GDP growth at 7.2% vs 6.7% provisional growth in 2017-18
India's GDP growth rate declined to 7.1 per cent during the July-September quarter, compared to April-June's 8.2 per cent, the official data had revealed on Friday.
The government data released Friday shows India's economy grew at 7.1 per cent in July-September, lowest in three quarters.
CII President Rakesh Bharti Mittal noted that GST, reforms in Ease of Doing Business, FDI, labour, agriculture, and many other initiatives aimed at improving the overall investment climate.
According to the global financial services major, dissipating base effects, tighter financial conditions and limited fiscal headroom will come together to moderate growth this fiscal.
Garg also expressed the hope that the country will meet its fiscal deficit target of 3.3 per cent and said both oil price hike and rupee depreciation are temporary.
As per the RBI, the growth would be in the range of 7.5-7.6 per cent in first half of the fiscal and 7.3-7.4 per cent in October-March 2018-19 period "with risks evenly balanced".
The prime minister further said that his government has taken steps in last four years to ease the process of doing business in India while maintaining macroeconomic indicators like inflation, current account deficit (CAD) and fiscal deficit within limits.
Observing that the Indian economy has grown at a healthy rate of 7.7 per cent in the fourth quarter of 2017-18, Modi said the challenge now is to take this growth rate to double digits, which requires more important measures.
The Reserve Bank, in its second bi-monthly monetary policy review for the current fiscal, said that the sharp rise in petroleum product prices is likely to impact disposable incomes.
The Asian Development Bank (ADB) has projected India to remain the fastest growing Asian nation with 7.3 per cent growth in 2018-19, and 7.6 per cent in 2019-20.
The Chinese GDP touched 19.88 trillion yuan (about 3.2 trillion US dollars) in the first three months of 2018.
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