(Recasts, adds quotes)
FRANKFURT, May 14 (Reuters) - India's central bank will take
note of falling inflation when discussing potential interest
rate cuts, Reserve Bank of India Governor Duvvuri Subbarao said
on Tuesday, adding he was very happy about the falling
Asked about potential interest rate cuts in light of falling
inflation, Subbarao said they would be taken into account in
future central bankers "will take note of softening inflation."
India's headline wholesale inflation fell below 5 percent in
April, dropping within the central bank's comfort zone for the
first time in more than three years and fuelling market hopes
for more monetary easing to revive flagging economic growth.
Subbarao said earlier he was "very happy" about the fall.
He also said that cutting public-sector budgets in India can
be supportive of growth, if done smartly and by increasing
"In India, we need austerity for growth, fiscal
consolidation can support growth in India," Subbarao said.
He also said that he expected the country's economic growth
to pick up speed in the second half of this year, and added that
India has to control its current account deficit and bring it
down to 2.5 percent from the current level of 5 percent.
(Reporting by Sakari Suoninen; editing by Ron Askew)