Why has S&P downgraded India’s growth estimates for FY22?

S&P Global Ratings cut India's GDP growth forecast for FY22 to 9.8% from its original forecast of 11% due to the possible impact of COVID resurgence. According to S&P, this resurgence could derail economic recovery and credit flows.

However, S&P has not offered any comment on the status of India’s current “BBB-“ rating, which is already just 1 notch above speculative. Economists warn that a combination of weak growth, high inflation and mounting fiscal deficit could trigger a downgrade.