With the companies across sectors showing signs of weaknesses, global financial major Citi on Thursday said India's economic growth rate would slow to 6.8 per cent in the current fiscal even if the Reserve Bank of India cuts rates.
"Companies across sectors have begun announcing plant shutdowns and delays in project implementation. The negative factors appear to more than offset the possible lagged impact of aggressive monetary easing and lower commodity prices," Citi said in a report.
It said reduced domestic investment on the back of tighter credit standards and external weaknesses should slow GDP growth to 6.8 per cent in the current fiscal and 5.5 per cent in the next fiscal.
In its report on financial market prospects in 2009, Citi said its forecasts factor in a further 200 basis point reduction in policy rates by the RBI.
With inflation down to 8.40 per cent, RBI is expected to cut policy rates, repo and reverse repo, along with a fiscal stimulus package by the government, to spur economic growth.
The Indian economy grew by 7.8 per cent in the first half of the fiscal from 9.3 per cent a year ago, and analysts predict further slowdown in the remaining period of this fiscal.
According to official sources, over 65,000 employees have lost jobs during the three-month period ending October in India on account of the economic slowdown.
"A sample survey of 21 companies found that 65,507 jobs were lost in the country in various sectors between August and October," a source said.