Since January, the RBI has effected 75 basis point reduction in the benchmark repo rate, which is an indicative rate for banks. But most lenders have cut their respective lending rates only by 20-30 bps during the period. Naik said industry needs a cut of at least 1% to get some relief.

"The RBI has cut the rate but the important point is if the banks are really passing it on? Are the real consumers benefiting?" Naik said. "Banks have only marginally passed on the benefits of a rate cut and not fully. Any additional rate cut should be conditional on that being passed on. If banks don't pass it on fully, there should be some deterrents for those banks. Banks take rate cuts only to increase their profits."

On Tuesday, Prime Minister Narendra Modi met top industrialists and urged them to step up investment to aide economic growth. At the meeting, which was attended by bankers as well, India Inc's representatives demanded a rate cut to ease financing issues.

"At a time when private sector risk appetite is so low due to so many problems, reduction in rates would be a big relief," Naik said.

The capital-intensive infrastructure is among the worst hit. Several developers have had to opt for financial restructuring and are, therefore, unable to invest.

While L&T, a $15-billion engineering major, continues to have a strong bal ance sheet, the company plans to remain conservative in bidding for new projects under the public-private partnership model. L&T takes up project development through its arm L&T IDPL.

"We have 17 road development projects, of which six-seven are not so profitable. Everyone bid aggressively for projects without realising how many impediments these projects would have to face. We will not bid for any new projects until all our projects are profitable, so we will remain cautious for the next two years," he said.

The economic slowdown, coupled with huge debt, has stretched the balance sheets of most private companies.The investment appetite of the private sector is low and companies are looking to sell assets to reduce stress.

"Who has money to buy? Foreign direct investment can help the sector, but that is not governed just by the exit policy. Foreign investors want business to be simpler, faster decision making and less impediments," Naik said.

Naik said the inability of the Centre to pass some crucial reforms in Parliament due to protests will make recovery tougher. "Quite a few reforms have been watered down and some are not going through. To that extent, we have to work much harder to achieve results," he said.