Two external members of the central bank's rate panel stated that interest rate cuts are necessary for India's economy to maintain rapid growth. They contended that the shocks to food prices thus far have not increased the pressure on inflation in general.

At the most recent policy meeting, two members of the Reserve Bank of India's monetary policy committee (MPC), Ashima Goyal and Jayanth Varma, dissented from the four votes cast in favor of maintaining the benchmark rate at 6.5%. A third external MPC member, Shashanka Bhide, admitted that the growth forecast is an "important consideration" when deciding policy, but she voted to maintain the status quo.

The three members' opinions demonstrate how officials are becoming more concerned about the third-largest economy in Asia, despite the fact that inflation continues to steadfastly exceed the RBI's 4% objective.

Since monetary policy usually takes three to five quarters to take effect, higher rates would affect growth in the following year rather than the current one, according to Varma, who has voted in favor of a rate drop for the past two sessions. "I've been more concerned about 2024/25 than 2023/24 for most of 2023/24. I am more concerned about 2025/26 now that we are in 2024/25. In an interview with Reuters, he said, "The strong catch up growth that we saw in 2023/24 does little to alleviate these worries."

India's fiscal year concluded in March 2024 with 8.2% growth in the country's GDP. According to the RBI, growth would drop to 7.2% in the 2025 fiscal year. Goyal stated in the minutes released on Friday that food price shocks, which have pushed headline inflation beyond the central bank's 4 percent objective, are not having a sustainable impact on inflation or inflation expectations. 

"We have waited for one year to watch the impact of these (food price) shocks, now it is time to move on," she stated. Goyal went on to say that the monetary policy would remain disinflationary towards bringing inflation credibly to the target, even with a 25 basis point rate decrease.