Cutting key interest rates will not magically lead to economic growth, Reserve Bank of India (RBI) Governor Raghuram Rajan has argued.

In a recent TV interview, Mr. Rajan said that cutting interest rate to boost economic growth was just "wishful thinking." He also countered the notion that the apex bank is standing in the way of economic growth.

Speaking on the topic, he said, "Somehow there is a sense among some bureaucrats and industrialists that you cut the interest rate and magically get growth. I think at this point it is a wishful thinking.. The notion that RBI is standing in the way of growth is nonsense."

He stressed that the central bank would be able to cut key interest rate only after inflation comes down to affordable levels.

India's main gauge of inflation, the wholesale price index, increased 6.16 per cent in December 2013 from the corresponding month of the previous year. It represented a slight fall on monthly basis, but it remained considerably higher than the central bank's comfortable limits. The consumer prices index climbed 9.87 per cent year-on-year in December last year.

The central bank responded by hiking its benchmark repo rate by 0.25 per cent, from 7.75 per cent to 8 per cent. The move was surprising for analysts as most analysts had projected no increase in key interest rates for the next few months.