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The firm added that a good monsoon is expected to help the prevailing low headline inflation, which would allow RBI to sustain its current accommodative stance. 
 
However, it hinted that India’s private investment remains weak despite a strong GDP. 
 
In the report, modest exposure to trade in goods as well as a net-commodity importing status have been cited as the reasons that have shielded the Indian economy from external headwinds up to some extent. 
 
However, it mentions the 9% annual decline in exports in real terms because of weak global growth, which India faced in the fourth quarter of 2015. Before that, the decline was of an average of 5.6% in the first three quarters of 2015. 
 
"Moreover, investment spending fell in the last quarter of 2015, as did industrial production and capital utilisation rates remain low," it said. 
 
It added that India's overall economic growth is supported by robust consumer spending, and this makes up 55% of aggregate demand in the economy. 
 
"Prevailing low headline inflation is expected to remain so, given the current forecast of a good monsoon season, and should allow the Reserve Bank of India to sustain its current accommodative stance," Moody's said, adding it expects Indian economy to continue to grow close to an annual rate of 7.5 per cent in real terms in 2016 and 2017, largely driven by private consumption growth. 
 
The implementation of the public sector salary increases, mandated by the 7th Pay Commission, and a rise in rural incomes, will support India’s private spending, given that a good monsoon comes, as is expected. 
 
<a href="https://www.thedollarbusiness.com/assets/articles/2016/04/43821_shutterstock_255070738_1620.jpg">Image source</a>

Moody's Investors Service has projected an economic growth rate of close to 7.5% for India, in both 2016 and 2017.

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Moody's Investors Service has projected an economic growth rate of close to 7.5% for India, in both 2016 and 2017.

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