Rajan also said weak results from India's corporate suggested final demand is yet to pick up strongly.
Analysts expect the Reserve bank to cut rates in next monetary policy.
The new bond was changing hands at 7.72 per cent.
Rajan was speaking at a news conference.
'Both IIP and CPI inflation numbers are showing a huge disconnect from the leading indicators.'
S&P warned about spending on subsidies and heavy government debt.
Sahoo panel suggests India must ease global borrwoging norms for corporate houses.
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.
Offshore rupee debt was likely to attract good demand
State-owned banks have amassed bad loans faster than private sector lenders.
India builds up record FX after Fed hints rate hike in future.
The Budget loosened the reins on public spending to drive growth.
India's banks rely on overnight borrowings to fund longer-term lending.
India allows foreign investors to buy upto $81 bn
Indian bond yields may not spike if the government opts to increase spending when it unveils its annual budget in late February.
Earlier, India said the headline annual consumer price inflation accelerated to 5 per cent, compared with a 4.4 per cent print in November.
The central bank also said accepting money under such structures was a cognizable offence
Trouble at a single bank among the top five most connected lenders could wipe out nearly 50% of Tier I capital