"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 percent in 2018, down from our previous forecast of 7.5 percent. Our growth expectation for 2019 remains unchanged at 7.5 percent," it said in an update of its 'Global Macro Outlook: 2018-19'.
Moody's said 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 Bankruptcy Code," it said.
Also, the ongoing transition to the new Goods and Service Tax regime could weigh on growth somewhat over the next few quarters, which poses some downside risk to the forecast, it said. "However, we expect these issues to moderate over the course of the year."
For the world economy, Moody's expected 2018 to be a year of robust global growth, similar to 2017.
"However, global growth will likely moderate by the end of 2018 and in 2019 as a result of a number of advanced economies reaching full employment, and because of rising borrowing costs and tighter credit conditions in both advanced and emerging market countries that will hamper further acceleration," it said.
The G-20 countries, it said, will grow 3.3 percent in 2018 and 3.2 percent in 2019. The advanced economies will grow at a moderate 2.3 percent in 2018 and 2.0 percent in 2019, while G-20 emerging markets will remain the growth drivers, at 5.2 percent in both 2018 and 2019, down from 5.3 percent in 2017.
Moody's said downside risks to growth stem from emerging markets turmoil, oil price increases and trade disputes.