Deeply worried at negative growth in industrial output, particularly the manufacturing sector, India Inc on Monday warned of job losses and said RBI should immediately bring down interest rates to stimulate investment.
Industry body Confederation of Indian Industry (CII) said a sharp decline in the capital goods sector is of particular concern, as it indicates lack of investment, which will continue to be a drag on growth.
"If allowed to continue, this would have serious consequences on employment and livelihoods," CII said.
Another industry association Ficci said, "It is high time that government incentivises investment and restore the fiscal stimulus by making the necessary fiscal space."
The manufacturing growth has now reached crisis level, it said adding the situation is likely to worsen further.
"With the plunge in industrial production, the economy is in a perfect storm. Time for India to live up to its reputation of responding to crisis," Mahindra Group Vice Chairman and MD Anand Mahindra said in a post on the micro-blogging site Twitter.
"...it's time for policy turbochargers; time for an Indian equivalent of a 'New Deal' in infrastructure spending," Mahindra tweeted.
The industrial output registered a negative growth of 5.1% in October, the lowest in over two years, mainly because of a steep fall in production in manufacturing, mining and capital goods sectors.
Output of the manufacturing sector, which constitutes over 75% of the index, declined by 6%.
Assocham said that continued fall in manufacturing has been a "worrying" factor. The time has arrived to take appropriate policy measures, it added.
PHD Chamber said that high borrowing costs, shooting energy cost and flaring up of manpower costs are the major impediments in retarding the output.