The Reserve Bank of India's governor, Duvvuri Subbarao, said on Wednesday the probability of raising interest rates is small but did not rule it out due to upside risks to inflation.

"I want to reiterate once again that the probability of hiking rates is not zero but it is small, just as the probability of easing interest rates further is also not zero but modest," he said in a conference call with analysts.

On Tuesday, the RBI cut its key repo rate by a surprise 50 basis point for the first time in three years to boost flagging growth.