Chairman of Economic Advisory Council to the Prime Minister C. Rangarajan told NDTV that the Reserve Bank has taken a "cautious view" by not cutting interest rates and the central bank's decision was "largely influenced by external sector considerations".
The current account deficit is high and the rupee has been under pressure for last few weeks," Mr Rangarajan said.
The RBI kept interest rates unchanged on Monday after cutting them in each of its previous three policy reviews. The central bank left rates on hold despite headline wholesale price index inflation falling to 4.7 per cent in May, within its comfort zone, and the economy growing at just 5 per cent in the fiscal year that ended in March, its weakest in a decade.
"On the pricing side and on the growth side, there could be an argument for easing monetary policy but they have refrained from doing it because of external sector consideration," Mr Rangarajan added.
The Indian rupee hit a record low last week and has been the worst performing currency in Asia. The current account deficit hit a high of 6.7 per cent of GDP in the December quarter.
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