RBI rate cut good for economy, not inflationary, says Arvind Subramanian

The government welcomed a surprise interest rate cut by the Reserve Bank of India (RBI) on Wednesday as good news for the economy that would not pose any inflationary risks.

Both the rate cut and the Union Budget, presented on February 28, were "consistent with non-inflationary growth", Chief Economic Adviser Arvind Subramanian told CNBC in an interview.

The RBI on Wednesday cut the repo rate - the interest rate at which it lends to banks - by 25 basis points to 7.5 per cent, effective immediately.

This is the second such move by the central bank in 2015 outside official policy meetings.

(Reuters)