Stimulus not enough for growth: Goldman

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New Delhi: Steps announced by the government and RBI to arrest economic slowdown will not change the growth outlook for the current fiscal, global financial firm Goldman Sachs said in a report on Monday, even as it felt the apex bank may go for another cut in policy rates by 50 basis points.

"While we welcome these counter-cyclical measures as a timely boost to confidence, we do not think that they will materially change the growth outlook," Goldman Sachs said in a Asia Policy Watch report.

Goldman said India's economy is likely to expand by 6.7 per cent in the current fiscal and 5.8 per cent in 2009-10.

The Gross Domestic Product (GDP) growth rate was 9 per cent in the previous fiscal.

Noting that RBI has since October reduced key policy rates several times, it said, "we believe the RBI will cut the repo and reverse repo rates by another 50 basis points in January to bring the corridor to 3.5-5 per cent."

As regards the cash reverse ratio, the amount that banks keep with the RBI, the central bank could reduce the ratio by another 150 basis points to inject more liquidity into the system, it added.

Since October, RBI has reduced the repo rate by 3.5 per cent, reverse repo by 2 per cent and CRR by 4 per cent.

The report said in the coming weeks, the banks could lower lending and deposit rates as a result of the easing money policy being followed by RBI.

"The fiscal and monetary measures announced will be positive for banks, NBFCs, and infrastructure companies, and limit further downside to growth," the report said.