As expected, the Reserve Bank of India (RBI) has kept key rates unchanged in its mid-quarter monetary policy review.
Cash reserve ratio ( CRR) has been kept unchanged at 6%, repo rate unchanged at 8.5%, reverse repo at 7.5% while SLR is at 24%.
Food inflation fell to a nearly four-year low of 4.35% in the year to December 3, data on Thursday showed.
India's industrial output slumped more than 5% in October from a year earlier, far worse than expected and the first drop in more than two years, with capital goods output down 25.5%.
Overall economic growth slowed to 6.9% in the September quarter, its weakest in two years, and some economists expect India to struggle to reach 7% growth in the fiscal year that ends in March 2012. The government had been targeting 9% earlier this year.
RBI guided that inflation was on its projected trajectory but it was seriously concerned about deceleration in investment and the growth momentum. RBI inflation projection for March 2012 was retained at 7%.
RBI hiked rates 13 times since March, 2010 in a bid to fight inflation.