There is a near consensus that at least a 25 basis points cut, if not 50, can be expected in the June policy.
The RBI cited lower-than-expected inflation, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target as reasons.
Benchmark 10-year bond yields hit a 13-month peak as bond traders priced in more aggressive monetary easing next year.
The central bank is the money manager of the government, and not a guarantor of any debt.
The Reserve Bank of India cut its repo rate by 25 basis points to 6.50 per cent.
The panel was set up to suggest ways to reform India's monetary policy.
