India rate decision shows division at top

Mumbai - Some top officials in the Reserve Bank of India say they were surprised by Governor Raghuram Rajan's decision to cut rates last week, a rare sign of divisions that could become much more public as the bank overhauls its decision processes in a way that will clip his influence.

According to policymakers with knowledge of RBI discussions, the move to cut rates by 25 basis points - the second cut in two months outside its normal meeting cycle - came despite concern in the bank's senior ranks that there is no clear picture on the state of the economy or on inflationary pressures.

And since the bank will now be judged by its ability to hit a formal inflation target, officials were also worried that a cut just days after the government's budget placed too much faith in New Delhi's promises of fiscal responsibility.