The import bills for coming months will show a rise in both volumes and prices. The climb in oil import costs is expected to be the most noticeable as global oil prices continue to slowly rise.

In addition to stronger demand for construction materials, food import needs may also rise amid a fall in domestic supply, Moody's said.

As India is one of the world's largest exporters of rice and sugar, a notable fall in output this year due to scanty rainfall is putting upward pressures on both domestic and global prices.

As a result, according to Moody's, the government may now have to allocate more funding, possibly via subsidies and loan waivers, to support struggling farmers.

'The authorities are also under pressure to ensure food security by building up reserves, which will also add to this year's fiscal outlays,' Chan said.

'The bid to contain the damage caused by insufficient monsoon rains and maintain social stability has made fiscal management difficult. The budget deficit for fiscal 2009-10 is likely to be larger than the government's current estimate,' he added.