On Thursday, Fitch Ratings slashed India's GDP growth forecast to 5.5 percent for the current financial year 2019-20 on account of a large credit squeeze emanating from shadow banks that dragged the country's economic growth to a six-year low.

Earlier, in June, Fitch had projected GDP growth at 6.6 percent for FY20. In its latest revision, the international rating agency said that the recently announced measures by the government, that include corporate tax rate cuts, would gradually nudge growth.

The growth projection is significantly lower than the Reserve Bank of India's (RBI) recent estimate of 6.1 percent after the monetary policy meeting in October.

Fitch expects GDP growth to pick up to 6.2 percent in the next financial year (2020-21) and to 6.7 percent in the following year.

In April-June period, growth in the Indian economy decelerated for the fifth consecutive quarter to expand at 5 percent, the lowest since 2013 and lower than the 8 percent GDP growth seen a year earlier.

"Weakness has been fairly broad-based, with both domestic spending and external demand losing momentum," Fitch said. "The Indian economy is being held back by a large squeeze in credit availability emanating from non-bank financial companies (NBFCs)," it added.