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India’s central government is the single biggest factor weighing on business confidence and the economic outlook, said Moody’s Analytics, an arm of rating agency Moody’s, said in a new report that. Joining a string recent India growth outlook downgrades, Moody’s Analytics cut India’s growth forecast to 5.5 per cent. “India’s potential growth is around 7.5 per cent, and we expect the economy to rumble along at 5 per cent to 6 per cent to mid-2013.The business sector has slowed, and fixed investment could be very weak, as firms see little reason to invest in extra capacity, weighing on both near-term and longer-term growth,” the report said. “The wave of reforms through the 1990s that lifted GDP growth above 8 per cent have stopped as corruption scandals, poor electoral results, an obstinate coalition partner, and an obstructive opposition have all but eliminated the Congress-led government’s mandate,” the report adds. The firm has warned that sustained pro-growth policies are needed. “We’ll need to see sustained pro-growth policies before we start to consider the Indian government anything but a sizeable drag on economic activity,” the report said. Moody’s Analytics said that there were no quick fixes to the slow growth situation. “While we applaud the intent of the new finance minister (P Chidambaram), it all has the feel of being a quick-fix, last-ditch effort to avert the economy from its downward spiral. But an economy is a complex combination of millions of different units—households, firms, government entities and so forth—that cannot be easily manipulated using tricks or quick fixes, at least not over a prolonged period,” the report adds. . Finance minister P Chidambaram said that the government could look at addressing concerns of international investors. He also said that the government is planning to announce steps for fiscal consolidation. India’s government spends more than it earns in tax revenue. Hence, it has to borrow from Reserve Bank of India to finance the ‘fiscal deficit’. This increases the money supply into the system as RBI has to print money and stokes inflation.