RBI Governor Urjit Patel had recommended keeping the central bank’s key interest rate unchanged at 6 per cent citing risks to inflation and uncertainties on the external and fiscal fronts, the minutes of October’s monetary policy committee (MPC) meeting released on Wednesday showed.

“We have to be vigilant on account of uncertainties on the external and fiscal fronts; this calls for a cautious approach,” he said.

Belying industry expectations, RBI maintained its hawkish stance at its fourth bi-monthly monetary policy review of the fiscal here earlier this month, refusing to cut rates in view of the rising inflationary pressure and concerns over “fiscal slippage”.

On the other hand, the central bank lowered the country’s growth projection for 2017-18, pegging the Gross Value Added (GVA) to 6.7 per cent, from earlier estimate of 7.3 per cent.

Declaring that inflation is expected to rise from its current level of around 3.3 per cent “and range between 4.2-4.6 per cent in the second half of this year”, Patel said the MPC remains committed to keeping headline inflation close to 4 per cent “on a durable basis”.

Five members of the six-member MPC voted in favour of maintaining the key lending rate.

The MPC had expressed concern about the upside risks to inflation and that implementation of farm loan waivers by states may result in fiscal slippages resulting in upward pressure on prices.

“Although the domestic food price outlook remains largely stable, generalised momentum is building in prices of items excluding food, especially emanating from crude oil. The possibility of fiscal slippages may add to this momentum in the future,” it said.

Besides Patel, RBI Executive Director Michael Patra, RBI Deputy Governor Viral V. Acharyaand outside members Chetan Ghate (Professor, Indian Statistical Institute) and Pami Dua (Director, Delhi School of Economics) were in favour of holding the repo rate at which the apex bank lends short term to commercial banks.

One of the government nominated external members, Ravindra H. Dholakia, a Professor at IIM-Ahmedabad, voted for a repo rate reduction of at least 25 basis points.

“In my view, the policy rate should have been cut by 50 basis point long back in June 2017. A cut of 25 basis point in August was too small and too late. We can still make the additional cut of 25 basis point now if we want to be extremely cautious,” Dholakia said at the MPC meeting.

“Otherwise, my opinion is that we have a space for a cut of about 40 basis point at present with due consideration to any possible upward risk to future inflation,” he added.

Acharya said that the Reserve Bank remains committed to improving the monetary policy’s transmission by the banks.

“I believe there is still some scope left for transmission of past monetary policy accommodation to existing loan portfolio that is tied to the base rate,” Acharya said.

Patel noted that recent reforms like the Goods and Service s Tax (GST) may have had some impact on growth in the short run.

“To improve immediate growth prospects, teething troubles relating to GST need to be addressed expeditiously. Concerted efforts also need to be made to encourage investment activity by removing various constraints,” he said.