Standard and Poor (S&P) Global Ratings on Wednesday slashed India's GDP growth forecast for the current financial year to 9.8 percent saying the second coronavirus wave may derail the budding recovery in the economy and credit conditions.

S&P, which in March had seen the Indian economy growing by 11 percent in the fiscal year to March 2022, saw GDP growth rate dropping to 9.8 percent under 'moderate' scenario where infections peak in May, and falling to as low as 8.2 percent under 'severe' scenario under which caseload would peak only in late June.

Just as the economy appeared to be inching back to normalcy, India was hit by a second wave of COVID-19 infections in early April, prompting states and cities to restrict public movements and impose lockdowns, which have hit some businesses hard.  "India's second COVID wave may derail a strong recovery in the economy and credit conditions," S&P Global Ratings said in a note adding the spiraling new infections, which account for almost half of the world's cases, has overwhelmed the health system in the country.

 The possibility of more local lockdowns being imposed to curb the spread may thwart what was looking like a robust rebound in corporate profits, liquidity, funding access, government revenues, and banking system profitability, it said.

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