Global ratings agency, Moody's has said that the Indian economy might have grown at the rate of 5.5 per cent in the second quarter of the financial year.

The agency also said that the hike in investor sentiment due to the recent reforms has faded and the `reality of India's deep-seated structural problems' are beginning to settle. Moody's said that the steps taken by the Indian government will help reduce the risks to the economy but will not be able to improve mid term outlook.

On the positive side, the agency said that the growth rate could be the lowest for this downturn cycle and the growth rate is likely to increase further. The growth rate for the July-September quarter is expected to be announced next week 30 November.

Moody's said that the growth rate for the second quarter could be "a little more than 5.5 per cent year-on-year, roughly the same as in the first two quarters but substantially below where GDP was 12 months ago. This underscores the economy's challenges, and it will be a while before GDP growth is back at its trend rate."

Finance Minister P Chidambaram has said that India's economy should be expanded 5.5-6 per cent this financial year.