Moody's Investor Service today cut India's credit rating outlook to negative, over mounting concerns over economic slowdown.
The cut also came on concerns of a worry of the budget deficit increasing to 3.7 per cent.
Moody's projects a budget deficit of 3.7% of gross domestic product in the year through March 2020.
India's ongoing economic slowdown may become "entrenched" and "long-lasting," according to Moody's Investors Service.
"Despite government measures to help reduce the depth and duration of India's slowdown in economic growth, prolonged financial stress among rural households, weak job creation, and a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown. If nominal GDP growth does not return to higher rates, the government will face significant constraints in narrowing its budget deficit and preventing a rise in debt," the rating agency said.
The rupee weakened by 0.40 per cent against the US dollar, following a cut in India's rating outlook. Stocks also traded lower with the Sensex losing around 100 points.