In its December monetary policy review, the RBI had kept interest rates unchanged but held out a promise to cut them if the upside risks to the inflation do not materialise.
The BJP led national alliance is already in poll mode and announced several sops at its interim budget on February 1.
The 6-member Monetary Policy Committee (MPC), headed by Patel, reduced repo rate or the short term rate at which central bank lends to banks, to 6.25 percent.
The MPC also chose to change the monetary policy stance from calibrated tightening to neutral. Most polled respondents expected the central bank to only change the stance, to neutral.
Listing the factors that influenced the growth outlook, the central bank said, "First, aggregate bank credit and overall financial flows to the commercial sector continue to be strong, but are yet to be broad-based". The Federal Reserve has changed direction, and now many analysts expect no US rate hikes this year, after four in 2018. The impact of policy cut was witnessed in banking stocks, as investors boosted the S&P BSE Bankex by a whopping 245 points with intraday high of 30,949.07 within few minutes of announcement.
Das also downplayed the risk of inflation rising due to the forecast of fiscal slippage in last week's budget, and said the MPC will only look at the headline inflation number and ignore core inflation that has proven sticky.
Analysts say India needs to regularly record growth of at least eight percent to generate employment for the millions entering the workforce each year.
Consumer prices rose 2.2 percent in December, the slowest pace in 18 months and below the RBI's October-to-March forecast range of 2.7 percent to 3.2 percent.
The RBI policy is a very dovish one and signals further rate cuts.
Four of six members of the MPC voted to cut the rates, while all six voted for a change in the stance.
In a tweet, Economic Affairs Secretary Subhash Chandra Garg welcomed the rate cut and stance change, saying the MPC had come up with a "balanced and pragmatic policy statement". The inflation rate is estimated at 3.2-3.4% in the first half of the year 2019-20 and 3.9 % in the third quarter of 2019-20, said RBI Governor Shaktikanta Das.
Patel's exit prompted some to fret the RBI's independence was under threat, but some economists argued that Thursday's decision should not be read as a surrender to pressure.
Even though at the RBI pressure, Das maintained that the decision on lending rates would be left to the banks and was quick to add that he would meet bank heads soon where issue of inadequate monetary transmission would be discussed.