India has cut its main interest rate for the first time in nine months in an attempt to revive economic growth.
The Reserve Bank of India (RBI) has lowered its key rate to 7.75% from 8%.
It also lowered the amount of money that banks need to keep in reserve, a move it said should provide 180bn rupees ($3.4bn; £2.1bn) of extra cash for them to lend.
India's growth has fallen to a three-year low and the RBI has been under pressure to stimulate the economy.
Easing inflationThe slowdown in India's growth had resulted in calls from both the government and business for the central bank to lower the cost of borrowing.
It had resisted the calls saying it had to keep inflation in check. However, the pace of consumer price growth has slowed in recent months.
India's Wholesale Price Index, the country's main gauge of inflation, eased to an 11-month low of 7.18% in December.
Commenting on its most recent move, the RBI said in a statement that the slowdown in the rate of inflation "provides space, albeit limited, for monetary policy to give greater emphasis to growth risks."
The RBI added that it expects inflation to slow further in the coming months.
It said that it expects the rate of inflation to dip to 6.8% in March, compared with its earlier projection of 7.5%.
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