Fitch Ratings has trimmed its forecast for India’s economic growth in 2017-’18 by half a percentage point to 6.9%, after a dismal April-June, PTI reported. The ratings agency had earlier projected the growth in India’s Gross Domestic Product at 7.4%.

The GDP growth had reached a three-year low of 5.7% in the quarter that ended in June.

However, Fitch expects economic activity to accelerate in the second half of the financial year, as the negative impact of demonetisation and the rollout of the Goods and Services Tax is now waning.

A limiting factor could be the “large stock” of non-performing loans on bank balance sheets, which could dampen credit growth and business investment, Fitch Ratings said in its latest Global Economic Outlook.

Last week, another ratings agency, India Ratings and Research, had lowered its projection for India’s GDP growth in 2017-’18 to 6.7%, citing the “more disruptive than expected” impact of demonetisation and the GST.