India's economy is at risk of slowing down in the current fiscal year, the government said in a mid-year economic survey Friday.
In February, the government had forecast GDP growth of between 6.75 percent and 7.5 percent for 2017/18.
But on Friday it warned there were several factors including the appreciation of the rupee and the introduction of a new goods and services tax that could hit growth.
"Deflationary tendencies are weighing on an economy yet to gather its full growth momentum and still away from its potential," Chief Economic Adviser Arvind Subramanian said in the survey.
India's growth slowed to 6.1 percent in the fourth quarter ending March after Prime Minister Narendra Modi's shock move in November to remove nearly 90 percent of the currency from circulation to crack down on tax evaders.
That was slower than rival China, although the growth figure for the full year was still higher at 7.1 percent.
Experts predict a further slowdown in the economy as businesses adjust to a new national goods and services tax launched last month.
The survey called for a further drop in interest rates -- currently at 6 percent after a 25 basis points cut last week.
"Sustaining current growth trajectory will require action on more normal drivers of growth such as investment and exports and cleaning up of balance sheets to facilitate credit growth," it said.