"The RBI Governor has himself said that there are several indications of a slowdown in the economy. That is why the central bank has taken the step of further reducing the repo rate.
"So, I think that the RBI having acted, the government will also take steps because it has been recognised that there is slowdown,"he said.
In its monetary policy review earlier in August, the RBI lowered the GDP growth rate for 2019-20 to 6.9 per cent, as compared to earlier estimate of 7 per cent.
The central bank slashed repo rate for fourth time this year bringing it down to 5.4 per cent to spur growth by providing cheaper loans.
There is growing distress across various sectors and industry has demanded sops and relief package from the government to tide over the crisis.
Industry captains like Anand Mahindra, A.M. Naik of L&T, Adi Godrej and many others have flagged demand slowdown in the economy.
The country's automobile sector, one of the key employers in the manufacturing sector, reported its steepest fall in vehicles sales in almost two decades in July leading to massive job cuts across the value chain.
"Policy steps are being taken and would continue to be taken to reverse the slowdown. The RBI has already acted and the government is also expected to take some measures to reverse the trend as soon as possible," Niti Vice Chairman said.
The economic growth has been slipping quarter after quarter with January-March period GDP growth slowing to 5.8 per cent in FY19. With most macro indicators showing demand weakness, the growth is expected to have further declined in April-June period. Financial services firm Nomura expect the GDP to moderate to 5.7 per cent in the June quarter.
With most engines of growth such as investment, demand, consumption and exports slowing down, the pressure is mounting on the government to act. The slow credit growth and stressed assets of banks are another area of concern and if not addressed in time could add to further deceleration in business activities. It may throw challenges in the way of government's plan to make India a $5 trillion economy by 2024-25.
"The credit is growing at about 12 per cent currently. Policy measures that RBI has taken and the measures government is contemplating the credit growth should further increase and go up to 18-20 per cent.
"The Budget has already announced recapitalisation of banks and the money has been allocated. It will give more firepower to extend credit," Kumar said
Given that, and also the expectation that IL&FS induced crisis in the Non-Banking Finance Companies sector will pass, the credit growth can increase to the level required for India becoming a $5 trillion economy by 2024-25, he added.
(Nirbhay Kumar can be contacted at nirbhay.k@.in)
( With inputs from IANS )