Leading global banks and financial advisory firms have slashed their growth forecasts for the economy to the 3.5-4 per cent range as they do not see signs of an early revival after India's GDP growth rate slumped to a four-year low of 4.4 per cent in the first quarter of 2013-14.The development comes as a major setback to Union Finance Minister P. Chidambaram's frantic efforts to attract much-needed foreign direct investment (FDI) to finance the current account deficit (CAD) and give a fillip to the slowing economy.Multinational financial services majors HSBC, Morgan Stanley and Nomura see a downside risk to the Indian growth story due to the high current account and fiscal deficits and the free-falling rupee. They also expect politics to get in the way of meaningful progress on structural reform as the country heads for its next general election in May.According to Morgan Stanley, recent incoming data in terms of growth inflation indicators show the economy is taking longer to come out of the stagflation-type environment. Morgan Stanley has pointed out that a weak growth trend lasting for 4-5 quarters would increase the risk of a vicious cycle building whereby the economy becomes vulnerable and the risk increases of GDP growth sliding to 3.5-4 per cent."Moreover, the recent monetary tightening and uncertain global capital market environment could mean that growth, which has already fallen below 5 per cent, would stay weak for at least two more quarters," it said. HSBC on Tuesday lowered India's GDP forecast for the current financial year to 4 per cent from 5.5 per cent in view of the prevailing "economic uncertainty". According to an HSBC research note, growth is likely to slow in the near term due to tighter financial conditions and higher macroeconomic uncertainty. "In light of this, we revise down our GDP growth forecasts to 4 per cent (from 5.5 per cent) for 2013-2014 and to 5.5 per cent (from 6.6 per cent) for 2014-2015, the note said.HSBC said leading indicators suggest the growth momentum could ease further during the July-September quarter in both manufacturing and services sectors.The pressure on growth momentum is likely to pose greater challenges to policymakers as they try to stabilise the falling currency, which had touched an all-time low of 68.80 to the US dollar on August 28 and is currently hovering around the $66 mark in highly volatile trade.In terms of the quarterly profile, HSBC expects growth to slow in the July-September quarter of 2013 and dip below 4 per cent. The growth will show faint signs of recovery during the final quarter of the fiscal year as macroeconomic uncertainties recede somewhat and confidence reluctantly recovers, it added.HSBC's manufacturing purchasing managers index for India sank to 48.5 in August from 50.1 in July, falling below the watershed 50 level that separates growth from contraction and marking its lowest reading since March 2009.The survey showed factories cut production in August, with the sub-index measuring output falling to its lowest since early 2009.Nomura has cut the growth forecast for the current financial year to 4.2 per cent from 5.5 per cent earlier and kept a negative view on the country's macro-economic outlook for the next three to six months.According to Nomura, downside risks to the growth outlook have materialised with financial conditions tightening much more than anticipated. "Looking ahead, a good monsoon and a gradual recovery in global demand are positives, but the question is whether they will be able to offset the drag from the ongoing balance of payment (BOP) stress," Nomura India's Sonal Varma said in a research note.According to Nomura, BOP pressures are likely to continue over the next three to six months, which would have an adverse impact on the economy through multiple channels like cost-push inflation, higher shortterm funding costs, asset price volatility and falling confidence, among others.Moreover, with fiscal pressures building, the government will likely be unable to continue its current pace of spending without risking substantial fiscal slippage.Meanwhile, the pressure on the growth momentum is likely to pose greater challenges to policymakers as they try to stabilise the falling currency.Hence, the risk of a pro-cyclical fiscal and monetary policy tightening is rising and the downside risks to our growth outlook have materialised with financial conditions tightening much more than anticipated, the report said.