Weakening of domestic growth impulses prompted RBI Governor Shaktikanta Das to opt for an unconventional rate cut of 35 basis points to push economic activities early this month, said the central bank on Wednesday.
One basis point is a hundredth of a percentage point.
Two of his RBI colleagues and an independent member in the rate-setting Monetary Policy Committee (MPC) had also favoured a 35-basis point reduction, against the normal practice of 25 or 50 basis points change, in the third bi-monthly monetary policy of 2019-20.
The other two members, both independent, in the six-member MPC had voted for a 25-basis point cut in the policy announced on August 7.
In an unusual move, the Reserve Bank of India (RBI) on August 7 had reduced the benchmark lending rate by 35 basis points to 5.40 per cent amid concerns over a slowdown in the economy. Before this, the RBI had reduced the rate thrice, each time by 25 basis points.
"In view of weakening of domestic growth impulses and unsettled global macroeconomic environment, there is a need to bolster dwindling domestic demand and support investment activity, even as the impact of past three rate cuts is gradually working its way to the real economy," said the governor, according to the minutes of the MPC released by the RBI on Wednesday.
CNBC-TV18 debates minutes of MPC's August meeting with Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership; Aditi Nayar, principal economist at ICRA and Rupa Rege Nitsure, chief economist at L&T Financial Services.