Industry chamber FICCI said the apex bank should intervene and cut interest rates.
"The IIP data for February calls for serious attention. It is important that RBI focuses on bringing down interest rates to stimulate investments which will further boost the demand," said Didar Singh, secretary general of Ficci.
Besides, he said, there is a need to ensure speedy approvals for large projects, under the Cabinet Committee on Investments (CCI).
Sharing similar views, CII director general Chandrajit Banerjee said, the industry body hopes the Reserve Bank will relook at its monetary policy in the light of latest IIP figures and reduce interest rates.
"We hope that the RBI would reduce repo rate (short-term lending rate) and cash reserve ratio (CRR) by 50 basis points, each, while announcing the annual monetary policy on May 3," he said.
CRR is the portion of money banks are required to keep with the apex bank.
Showing a slump in the economy, the industrial growth has slipped to 0.6 per cent in February this year mainly on account of contraction in power generation and mining output and poor performance of manufacturing sector.
Factory output, as measured by the index of industrial production (IIP), had grown by 4.3 per cent in February last year.
Assocham said both the macro-economic numbers - industrial production and retail inflation -- clearly point to a dismal state of affairs in the Indian economy, requiring urgent and bold steps not only from the Finance Ministry but also from the apex bank.
"Industrial growth of mere 0.6 per cent in February and a cumulative of 0.9 per cent is hardly a growth. We are almost slipping into the negative zone. Today's numbers including continuous double digit consumer inflation will add to the problems at the macro level," Assocham president Rajkumar N Dhoot said.
He said an all-out effort must be made to restore investor sentiment and consumer confidence.
"Both stand shaken today. While it is true that the global factors have aggravated the situation, there is not much enthusiasm in the domestic economy as well," he added.
PHDCCI president Suman Jyoti Khaitan pitched for 100 basis points (1 per cent) cut in short-term interest rate by the RBI in its forthcoming credit policy, saying such a step was necessary to improve investor sentiments and promote growth.
"Tight monetary stance by RBI has impacted investment sentiments in the economy and inflation still remains in an uncomfortable growth trajectory," he said.