Chief Economic Adviser Arvind Subramanian on Wednesday said India is still a recovering economy, adding it is on its way in maintaining a healthy momentum.
"The RBI statement echoes really what we have said in the economic survey that we should still view India as a recovering economy because other indicators of activity are still relatively weak," he said.
"The Railway Budget, the Budget, the economic survey, the RBI cut, all of these are suggesting that the Indian economy has in on its way in maintaining a healthy momentum and the outlook goods as it is backed by the data, backed by reforms, a budget that is going to push forward growth. If outlook is looking good, the rating agencies should draw their lessons from that improving outlook," he added.
Subramanian also said that the outlook for inflation in the budget and economic survey is about 5 to 5.5 per cent.
"And as long as those trends continue the RBI itself has said it represents the shift in the monetary policy stance. But the exact timing and magnitude of cuts will be determined by the data going forward, he added.
Meanwhile, Minister of State for Finance Jayant Sinha earlier in the day said that the off-cycle repo rate cut by the Reserve Bank of India was a welcome move for the citizens, adding that it provides a near-term boost to the economy.
The Reserve Bank of India (RBI) has cut the Repo Rate by 25 basis points to 7.5 percent, signalling that it was convinced by the fiscal consolidation measures announced in the budget proposals for 2015-16.
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The RBI has kept the cash reserve ratio (CRR) unchanged at four percent.
This is the second out of turn 25 basis point-cut after the one in January.
The RBI move to cut the Repo Rate by 25 BPS had its immediate impact with the Bombay Stock Exchange's Sensex opening on a record high 30000 points and the National Index or Nifty opening at 9100 points in early morning trade.
The Sensex is up 407.43 points or 1.4 percent at 30001.16, and the Nifty is up 112.90 points or 1 percent at 9109.15.