In its latest report released on Monday, S&P Global Ratings has downgraded India's growth forecast from 5.2 percent to 3.5 percent for the upcoming fiscal year 2020-21 that begins on 1 April, on account of deteriorating credit conditions in the Asia-Pacific region.
"While lower official interest rates and government stimulus actions provide some relief, the slump in demand is likely to lead to declining credit quality and rising defaults, particularly among non financial corporates with weaker credit profiles," the report said.
This is the second downgrade in growth projections by the global rating agency. The most recent one was on 17 March, ahead of the announcement of economic stimulus and 21-day lockdown by the government, where it had lowered India's growth from 5.6 percent to 5.2 percent citing the effect of the global recession on the Asia-Pacific region.
Meanwhile, S&P Global Ratings has forecasted a 5 percent growth for FY20 and expects a sharp uptick in the Indian economy to 7.3 percent in FY22.