Chief economic advisor (CEA) Krishnamurthy Subramanian on Thursday said 25 bps rate cut is consistent with the Reserve Bank of India (RBI) stance adopted in February.
One basis point is a hundredth of a percentage point.
The six-member Monetary Policy Committee (MPC), headed by RBI governor Shaktikanta Das, cut the repo rate to a one-year low of 6 per cent and reverse repo rate to 5.75 per cent on prospects of benign inflation. While four of the six members voted in favour of the rate cut, two of them were in favour of the status quo.
In an interview to CNBC-TV18's Sapna Das, Subramanian said, "If you look at some of the key indicators, it gives some reason for optimism. If you look at the fixed capital formation, it had actually trended up in Q2 and Q3. You also have the IIP and the manufacturing IIP, those indices actually being at a higher level compared to levels last year. Crucially, credit growth, especially to large firms, has started increasing. So, the effects of some of these would be felt with a lag. Overall, we are still among the largest economies that are growing very well."