Global rating agency Standard and Poor's (S&P) has warned that there are chances that the outlook for India might be downgraded.

Kimeng Tan with the agency said that there is `1 in 3 likelihood' of a downgrade for the country during the coming 24 month period. S&P had downgraded India's sovereign outlook to "negative", warning that the country's rating of "BBB-" might be further downgraded. The rating of BBB- is the agency's lowest investment-grade rating.

The agency believes that the Indian economy is facing difficulties due to low rainfall in the country as well as international factors like continuing debt crisis in the Eurozone and a slow recovery in the US. The Indian government is taking steps to improve the situation and had increased the price of diesel to reduce its deficit.

"A downgrade is likely if the country's economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow," it said in a report.

Indian government is working to avoid the emerging country being dumped with a rating of junk, which might deter investments from abroad that are needed to maintain the high pace of economic growth.