The Reserve Bank of India managed to surprise markets once again with a rate cut of 25bps to key rates at an unscheduled meeting. This rate cut follows the recently unveiled Union Budget for 2015-16 and appears as a sign of support for the new policies set out by the government. In their latest statement the RBI appears confident of the government’s efforts for better fiscal consolidation, despite the delay in reaching the deficit target. An officially agreed inflation target of 4% (+/-2%) is also a positive sign of co-operation. The central bank and government’s efforts to work together with complementary fiscal and monetary policy should be a very constructive signal for investors in the Indian market.