Moody's has downgraded India's credit rating prospect because of increasing risks of a long-term slowdown in the economy and rising debt, DPA reported.

The Indian government said that it has undertaken a number of reforms in the financial sector and in other areas to strengthen the economy while keeping its fundamentals stable.

India continues to offer stable growth prospects in the short and medium term, the finance ministry said in a statement.

Moody's noted that the decision, released last week, partly reflects the government's weaker performance and measures to address long-standing economic and institutional weaknesses than the agency had previously thought.

The rating agency kept India's long-term credit rating unchanged - Baa2 (Latin letters).

The Indian economy grew by only 5 percent year-on-year in the April-June quarter, the slowest growth rate since 2013.

In October, the Central Bank revised down its forecast for GDP growth for this fiscal year ending March 2020 to 6.1 percent from 6.9 percent in the previous estimate, BTA recalls.

According to Moody's, the main reasons for the sluggish growth are financial stress among rural households and poor job creation along with non-performing assets in the banking sector, which in turn lead to tightening lending conditions.

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