New Delhi (CNN Business) India's central bank just slashed interest rates for the third time this year as it tries to get the country's economy back on track.

The Reserve Bank of India cut the rate at which it lends to banks from 6% to 5.75%, just days after new figures showed economic growth has dropped to its lowest level in two years.

The bank attributed its decision to the growth plunge, citing a drop in private sector demand and exports. "However, the overall slowdown in growth was cushioned by a large increase in [government spending]," it added.

The cut takes India's key interest rate to its lowest level in nearly a decade and should provide a boost for Prime Minister Narendra Modi as his second term in office begins following a landslide election win.

Modi secured a bigger majority than expected even as growth slumped to 5.8% in the quarter ended March, the weakest rate of expansion in two years. The economy grew by 6.6% in the previous quarter.

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