New Delhi: Fears over deficient rains in the current monsoon season and gradual progress of reforms have prompted global credit ratings agency Moody’s to lower India’s growth forecast for this year by 50 basis points to 7 percent.

“As a net importer of commodities, India’s growth outlook benefits from the fall in commodity prices over the past year. It is also little affected by demand from China and more generally slower global trade growth,” Moody’s Investors Service said.

“We have revised our GDP growth (for India) forecast down to around 7 percent in light of a drier than average monsoon although rainfall was not as low as feared at the start of the season,” it said in its latest “Global Macro Outlook 2015-16” released on Tuesday.

“We maintain our forecast that GDP will rise by 7.5 percent in 2016.” it said, adding that economic activity will continue to strengthen, with the implementation of reforms, gradual as they may be.

“One main risk to our forecast is that the pace of reforms slows significantly as consensus behind the need for reform weakens once the least controversial aspects of the government’s plan have been implemented,” it said.

One such reform, as indicated above, is the introduction of a pan-India goods and services tax regime, which is a lengthy process — beginning with an amendment to the Constitution and approvals by at least 15 states.

At the same time, the agency held out hope that India may overtake its Asian neighbour this year. “In China, Moody’s maintains its baseline GDP growth forecast of 6.8 percent this year and 6.5 percent in 2016, before falling towards 6 percent by the end of the decade.”

The latest assessment comes against the backdrop of official statements by India that monsoon rains were now predicted at 10 percent below normal even as the country’s grain output fell 4.7 percent in the 2014-15 (July to June) season.