Commenting on the policy announcement, Confederation of Indian Industry (CII) director general Chandrajit Banerjee said the rate cut would propel investment demand, spur spending in rate-sensitive consumer durables and give a fillip to construction activity.

"Going forward, CII hopes that while maintaining a delicate balance between growth and inflation, the RBI would shift its stance in favour of growth, given that the trend in inflation is clearly subdued," Banerjee said.

The Associated Chambers of Commerce and Industry of India (Assocham) also applauded the RBI decision and observed that the move has correctly assessed the industry's need.

"The RBI view that any further cut in rate would depend upon further moderation of food inflation and current account deficit is well acknowledged. This move will bring cheer for industry, economy as whole and for the common man," said Rana Kapoor, Assocham president.

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