S&P Global Ratings on Monday slashed its growth forecast for India to (-) 9 per cent in the current fiscal, from (-) 5 per cent estimated earlier, saying that rising COVID-19 cases would keep private spending and investment lower for longer.
"One factor holding back private economic activity is the continued escalation of the COVID-19," S&P Global Ratings Asia-Pacific Economist Vishrut Rana said.
Rising COVID-19 cases in India will keep private spending and investment lower for longer. S&P Global Ratings now expects the country's economy to contract by 9 per cent in the current fiscal year, which ends March 31, 2021, the US-based rating agency said in a statement.
S&P had earlier forecast India"s economic contraction at 5 per cent.
It said the 23.9 per cent contraction in the April-June quarter was larger than expected.
"While India eased lockdowns in June, we believe the pandemic will continue to restrain economic activity. New cases per day in India averaged nearly 90,000 in the week ending September 11, according to data from the World Health Organization.
"This is up from an average of about 70,000 per day in August. As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain," S&P said.
Last week, two other global rating agencies Moody's and Fitch had projected Indian economy to contract 11.5 per cent and 10.5 per cent respectively in the current fiscal. However, Goldman Sachs has estimated the contraction at 14.8 per cent.