Indian government is the "single biggest factor weighing on business confidence and the economic outlook", Moody's Analytics said while revising downwards the GDP estimate for Asia's third-largest economy to 5.5% in 2012-13.

It said the economic slowdown in India was sharper and more broad-based than anticipated and was now deeply entrenched across all sectors of the economy.

"There has been little policy response from either the Reserve Bank of India or the government and with the global uncertainty dragging on, we see nothing on the horizon to lift the economy from its funk," said Glenn Levine, senior economist at Moody's Analytic,

The agency, which is a division of Moody's Corporation, said the slowdown was the most pronounced in the country's corporate sector.