India's headline inflation may moderate to 7% or little lower by March, R Gopalan, secretary, economic affairs in the Ministry of Finance said on Tuesday.
He said that the cut in cash reserve ratio (CRR) was a "good step" and the central bank recognises the need to boost growth.
Earlier Tuesday, the Reserve Bank of India cut the CRR for banks by 50 basis points to 5.50%.
It left interest rates unchanged and said the growth outlook and business climate have weakened, but warned of upward risks to inflation.