Moody's Analytics on Friday said that India risks losing "domestic and global credibility" if Prime Minister Narendra Modi fails to keep the members of the ruling Bharat Janata Party (BJP) under check.
The research firm, a subsidiary of global rating agency Moody's, said that controversial comments from some BJP members in the wake of intensifying controversy over beef ban is "not helping the government".
"While PM Modi has largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions," PTI quoted Moody's Analytics as saying.
Key reforms bills like Land Acquisition bill and Goods and Services Tax (GST) Bill have stalled in Rajya Sabha, where the ruling BJP doesn't have a majority due to "obstructionist opposition", the firm said.
"Along with a possible increase in violence, the government will face stiffer opposition in the upper house as debate turns away from economic policy. PM Modi must keep his members in check or risk losing domestic and global credibility," it said in a report titled 'India Outlook: Searching for Potential'.
The Modi government has to pass the reforms promised during the elections in order to make the country to "reach its growth potential", it added.
Moody's Analytics estimated India's gross domestic product (GDP) growth to come at 7.3% for the September quarter, while projecting it at 7.6% for the full fiscal year.
"Key economic reforms could deliver greater potential GDP, as they would improve India's productive capacity. These include the land acquisition bill, a national goods and service tax, and revamped labour laws. They are unlikely to pass through Parliament in 2015, but there is an even chance of success in 2016," Moody's said.