The Asian Development Bank (ADB) on Wednesday lowered India's economic growth forecast to 10 percent for 2021-22 - down 1 percent from it April prediction.
According to the multilateral funding agency, India's growth forecast was cut following the deadly second COVID wave in April and May, which "dented the recovery."
The funding agency also said rising input costs would push inflation to 5.5 percent instead of the previous estimate of 5.2 percent.
"The outbreak, however, dissipated faster than anticipated, resulting in several states easing lockdown measures and returning to more normal travel patterns. The economy is expected to rebound strongly in the remaining three-quarters of FY2021," said the Asian Development Outlook Update (ADOU) 2021.
The report further predicts that a deficient monsoon could worsen inflationary pressure.
"Rising global oil and commodity prices, and soaring food prices due to delayed crop sowing, will continue to put upward pressure on India's inflation," it added.
Earlier in May, Goldman Sachs also downgraded its growth projection for India from 11.7 percent to 11.1 percent.