the declining in the January inflation and subdued growth in industrial output could prompt a rate cut going forward.
Industry chamber CII said there was a need to address the supply side bottlenecks to increase availability of food stocks.
"The declining trajectory of both headline and core inflation has created sufficient room for RBI to cut its policy rates by 50 basis points in its review of monetary policy in March," CII Director General Chandrajit Banerjee.
The RBI is scheduled to come out with mid-quarter policy review on March 19.
"The mild moderation in core inflation, combined with the weaker-than-expected industrial performance in December 2012, boosts the likelihood of monetary easing in mid-quarter policy review in March," ICRA Senior Economist Aditi Nayar said.
The central bank had last month lowered interest rates by 0.25 per cent saying that with inflation showing signs of remaining range bound, it was now critical to arrest the loss of growth momentum.
According to the advance estimates of Central Statistical Organisation (CSO), the GDP growth in the current fiscal is likely to be 5 per cent. However, the government expects it to be over 5.5 per cent. The economy grew by 6.2 per cent in 2011-12 fiscal.
LEIF ESKESEN, CHIEF ECONOMIST FOR INDIA AND ASEAN, HSBC, SINGAPORE"It is clearly much lower than anticipated. Things are moving in the right direction, it is positive and encouraging for the Reserve Bank of India."However, other factors will have to fall into place before the RBI eases again, and that includes continuation of structural reforms and what the budget brings.
"The RBI will also keep a close watch on the consumer price inflation and the fiscal deficit."
ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI
"We seem to be looking at continued deceleration in manufacturing product inflation. I am not sure where the relief on fuel has come from, one has to look at the fine print."However, with both the headline inflation and manufacturing coming down, we are looking at a sharp and sustained downward trend, which should give the RBI the elbow room to go ahead at least with a couple of more rate cuts in the first