The Reserve Bank of India took emergency action at the weekend to pump liquidity into the local banking system amid mounting concerns that the global financial crisis will cut significantly India’s economic growth.

The threat of a slowdown is also being felt by India’s richest 10 billionaires, who control some of the country’s biggest companies and have suffered $206.5bn (€161bn, £127bn) in paper losses this year, according to an FT analysis. With foreign investors helping drive down Mumbai’s main stock market index by 52 per cent since January, the valuations of their listed companies have been battered.

Underlining the worries about India’s economic resilience, the Associated Chambers of Commerce and Industry of India forecast last week that the global financial crisis would lead in coming weeks to a loss of 25 per cent of the work force in the steel, cement, construction, real estate, aviation, IT and financial services industries. The prediction, however, drew a sharp response from the government, which insisted the domestic economy was still a job creator, and the associated chambers withdrew its assessment.

On Saturday, the RBI cut the repo rate 50 basis points to 7.5 per cent, lowering the key short-term interest rate for the second time in two weeks. It also reduced the cash reserve ratio, the amount of money banks have to hold with the central bank, 100 basis points to 5.5 per cent, releasing about Rs400bn ($8.1bn) into the banking system.

The measures to protect Asia’s third largest economy followed rate cuts by the central banks of Japan and China last week. “The global financial turmoil has had knock-on effects on our financial markets; this has reinforced the importance of focusing on preserving financial stability,” India’s central bank said.

With inflation steadily falling from a peak of 12 per cent, policymakers appear ready to support India’s fast-growing economy. The central bank is predicting that in the current fiscal year growth will be between 7.5 per cent and 8 per cent. But some top government officials warn of significantly slower growth because of the weakening in the US and European economies.

The Confederation of Indian Industry said the RBI’s latest steps reflected a sharp increase in overnight lending rates and serious concerns about the availability of credit at reasonable rates. Last month’s decision to cut the repo rate ended a four-year period of rising rates. While the stock market tumble has affected tycoons across most sectors of the economy, the biggest loser has been Mukesh Ambani, India’s richest man, whose companies Reliance Industries and Reliance Petroleum lost $53.1bn in value, exacerbated by the drop in commodity prices in the past four months.

His estranged brother Anil Ambani, India’s second richest person, has seen $52bn wiped off the valuations of his telecom, power, financial services and infrastructure groups.

KP Singh, India’s real estate tycoon, lost $37bn as shares in his company DLF have dropped nearly 75 per cent since the beginning of the year as property prices collapsed by 30 per cent, according to several analysts who spoke to the FT.

The $200bn in paper losses by India’s super-rich, which is close to the gross domestic product of neighbouring Bangladesh, is a clear indicator of how badly the exodus of foreign investors has hit the equity markets.

Foreign institutions have made net sales of $8bn worth of stocks since the beginning of the year compared to the net purchase of $15bn the previous year, said the Securities and Exchange Board of India, the market regulator.

A banker with a foreign institution said it would take time for India’s billionaires to recover their losses: “First the global risk appetite has to recover, then the Indian government has to come out with convincing policies in favour of industry and finally the monetary policy must make the right move. It won’t happen overnight.”