Rajan also said weak results from India's corporate suggested final demand is yet to pick up strongly.
Modi's government plans to support domestic demand
The government had no option but to cut spending to meet its borrowing targets.
Officials said the government had no option but to cut spending.
The RBI holds its next policy meeting in early June.
The new bond was changing hands at 7.72 per cent.
The finance ministry is seeking to speed up deals with outside investors.
Modi sees export-led growth one of the best ways to create jobs.
The introduction of GST would constitute India's biggest reform.
Traders believe the RBI will step in more strongly, if the rupee starts falling towards 65
The convertibility is RBI Governor's 'next big ambitious goal'.
Exports to Europe shrank by near 2 per cent in the 11 months.
India needs to move towards full capital account convertibility to become a leading global economy.
S&P warned about spending on subsidies and heavy government debt.
It was 2.6% in January.
The RBI targets inflation at 6 percent by January 2016 and 4 percent for 2017/18.
RBI governor Raghuram Rajan says a cut in cash reserve ration will not at all impact lending rates.
New Delhi has missed its target for partial privatisations for the past five years
Investors and manufacturers have long advocated the GST.
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