Finance minister Pranab Mukherjee said there was "no need for panic" after the rating agency Standard & Poor's downgraded the country's outlook from stable to negative on Wednesday.
India is likely to pass some financial reforms in the current session of Parliament, which started on
'Govt not in a position to bring reforms' Monday, he added.
"There is no need for panic," Mukherjee told reporters.
"The situation may be difficult, but we will be surely able to overcome (it)," he said.
The lowered outlook jeopardises India's long-term rating of BBB-, which is the lowest investment grade rating.
"The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting," S&P credit analyst Takahira Ogawa said in a note.
India's 10-year bond yield rose 4 basis points to 8.63%, while the rupee weakened to 52.64 against the dollar from 52.48 before the action.
Moody's has a Baa3 rating on India, while Fitch rates India BBB-. Both are also the minimum investment grade ratings. Moody's in December issued a stable outlook for India.