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The central bank has room to further ease its monetary policy, Chief Economic Adviser Arvind Subramanian told reporters on Tuesday.
The Reserve Bank of India is widely expected to lower interest rates for a third time this year, at its policy review on June 2, after retail inflation cooled to a four-month low of 4.87% in April.
Adequate food stocks would help contain inflation, even if summer monsoon rains turn out to be weak, he added.
The June-September monsoon season is vital for India as half its croplands lack irrigation, but a forecast of less rain than usual this summer due to the emergence of the El Nino has threatened farm output.
