India's central bank, the Reserve Bank of India (RBI), Tuesday announced the cutting of its key policy rate for the first time in three years, cutting the repurchase rate to 8 percent on 50-points basis.

The move was apparently aimed at arresting the decline of economic growth and stimulating industrial and real estate growth.

From now, home, automobile and commercial loans will become cheaper for Indians, said analysts.

RBI Governor D. Subbarao said in a televised speech that the repurchase rate was being cut by 50 basis points to 8 percent, which will automatically see the reverse repurchase rate also drop to 7 percent from 7.5 percent.

The repurchase rate is the interest the central bank levies on short-term borrowings by commercial banks, while the reverse repurchase rate is the interest on short-term lending.

Subbarao also said that the growth rate of the Indian economy for the current fiscal year which ranges from April 2012 to March 2013 could reach 7.3 percent.