India's Ministry of Finance has increased its growth forecasts for the current fiscal year. But it also warned about inflation, particularly for fuel and energy, amid continued instability in the Middle East.

Robust consumption, improving investment dynamics and strong macroeconomic fundamentals imply that the economy appears well positioned to sustain growth near 7 per cent over the medium term, Moody's said.

Moody's Ratings on Wednesday said the Indian economy is expected to grow at a higher rate of 7 per cent in the current fiscal.

Moody's said broad-based economic growth, strong domestic consumption and improving investment were helping India navigate external pressures. Sound macroeconomic fundamentals should also allow the economy to sustain growth close to 7% over the medium term, it added.