After making a larger-than-expected cut of 50 basis points on September 29, Rajan urged the federal government to do its bit to accelerate growth through structural reforms.
A Reuters poll showed only one out of 51 economists had expected a 50 basis points rate cut.
The government is aiming for an 8-10 per cent annual economic growth.
Finance Minister Arun Jaitley, who wants pension and insurance funds to invest more in equities and infrastructure.
Lending rates have to be sensitive to the policy rate, says RBI.
Indebted developers are cutting staff as they slow work on existing projects and postpone new ones until they clear a backlog of 700,000 unsold homes
Modi's party also wants to regulate property markets and tie investor money to specific projects to stop developers diverting cash elsewhere.
Indian Oil Corporation's stake sale received overwhelming reponse from investors.
The rupee has fallen more than 2 per cent against the dollar since the yuan devaluation
The trade deficit widened to $12.8 billion last month
It also named bosses for Bank of India, IDBI Bank Ltd and Punjab National Bank from within the state sector
The rupee fell 1.87 percent against the dollar this week, its biggest fall since late April.
Modi's'Make in India' drive launched last September included laying out a model of "port-led" development that would support industrial growth.
Finance Minister Arun Jaitley sought parliament's approval on Friday to increase the spending budget for this fiscal year by $4 billion, with almost half to be used to inject extra capital into state banks struggling with bad loans.
Economists and investors want RBI to retain independence in setting rates
India plans to phase in cash transfers of food and kerosene subsidies from September, saving 10-15 per cent of the $21 billion in annual outlays on the benefits by eliminating fraud, a senior finance ministry official said on Thursday.
Worries over Greece sparked a sell-off in emerging markets on Monday
The RBI chief was speaking to researchers at an analyst call.
Modi's government plans to support domestic demand
The government had no option but to cut spending to meet its borrowing targets.
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