The NDA Government's Chief Economic Adviser, Arvind Subramanian, has said that the recent economic measures introduced would power high growth rate.
Subramanian also called on sovereign rating agencies to review their decision of labelling India in the negative, as its outlook was looking good.
"The railway budget, the budget, the economic survey, now the RBI cut, all of these are suggesting that the Indian economy is on its way to maintain a healthy momentum and the outlook looks good because it is backed by the data, backed by reforms. A budget that is hopefully going to push forward growth. So, if the outlook is looking good, I think the rating agencies should draw their lessons from that improving outlook," said Subramanian.
"The outlook for inflation is in the budget and in the Economic Survey. It is about 5 to 5.5 per cent and as long as those trends continue, the RBI itself has said that this in the January statement that it represents the shift in the monetary policy stance, but the exact timing and magnitude of cut will of course be determined by the data going forward," added Subramanian.
Minister of State for Finance Jayant Sinha said that the interest rate cut represented a vote of confidence in the government's fiscal consolidation efforts and would provide a near-term boost to the economy.
Analysts said the RBI's repo rate cut appeared to give backing to the government's fiscal plans and its pledge to exercise responsibility despite a delay in meeting a fiscal deficit target of three percent of gross domestic product by a year to 2017-18.
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In an otherwise cautious policy statement, central bank governor Raghuram Rajan told Reuters that fiscal and monetary policy would work "in a complementary way".
Indian bonds and rupee rose sharply after the cut. The benchmark 10-year bond yield dropped to as much as 7.61 percent, its lowest level since July 15, 2013. The partially convertible rupee gained to as much as 61.65 to the dollar, its strongest level since February 4.