India's gross domestic product (GDP) will grow at a much slower pace in the next few quarters unless the government comes out with a stimulus package to boost both domestic consumption and exports, rating agency Moody's said last week.

While official estimates put India's growth rate at 7.6 per cent in the second quarter (July-September 2008-09) and by over 9 per cent in the whole of the previous year, different agencies have projected the country's growth rate between 7.6 per cent and 5.3 per cent.

Moody's expects India's growth to fall to less than 7 per cent in the next four quarters.

The rating agency expects the government and the Reserve Bank of India to aggressively implement stimulatory measures to revive growth. However, the debt trap in which the government has almost fallen into should act as a deterrent to active stimulus measures, Moody's said in a report

''As inflation is gradually easing, the RBI will be able to keep cutting rates in order to sustain demand. However, facing a large debt burden, it is difficult for the government to be as aggressive as they would like to be in boosting economic activity,'' it said.

The 7.6 per cent growth rate in the second quarter of the current fiscal should come as no sign of the economy's immunity to the global recession as no country can escape the effects of a global downturn in an increasingly interconnected world, it said.

Financial services group Goldman Sachs expects India's economy to grow at an even lower rate of 6.7 per cent for the current fiscal. It also expects the RBI to cut the short term lending (repo) rate to propel growth.

 "We continue to expect GDP growth to slow to 6.7 per cent in FY09 and further weaken to 5.8 per cent in FY10,'' Goldman Sachs said in a research report.

The report also said the 7.6 per cent growth rate in fiscal second quarter does not capture the real slowdown of the economy in the second half of the year. The continuing fall in industrial production, exports, purchasing managers index and motor vehicle sales point towards much slower GDP growth from next quarter onwards, the report said.

"The larger-than-expected shock to the financial sector and its knock-on effects on both domestic and external demand is likely to slow growth next year as well," the report added.

Industry association the Associated Chambers of Commerce and Industry (Assocham) has projected a rosy picture, with the economy growing at 7.6 per cent in the next two quarters of the current fiscal as well.

Nomura Financial Advisory and Securities (India) expects India's GDP growth to fall between 7.2 per cent and 6.8 per cent. It also slashed FY10 growth forecast from 6.9 per cent to 5.3 per cent, due mainly to a slump in exports and lower capital expenditure.

The Japanese investment firm expects inflation rate in the country to ease substantially to 2.6 per cent in fiscal 2010 and a likely deflationary phase (with negative inflation) between July-August 2009.

Nomura expects capital outflows to increase and its associated risks of dollar outflows to worsen in the coming quarters. It expects a balance of payments deficit of $39 billion in FY09.

Much will depend on the policy response, the level of commodity prices and the extend of the global recession, Nomura said.

It said the financing of new fixed capital is becoming more costly amidst a thinning of profits, falling corporate savings, the global credit crunch and a marked decrease in external commercial borrowings and equity financing.