Four years of the inflation targeting framework
Publication dateNov, 2020
DetailsNIPFP Working Paper No. 325
AuthorsIla Patnaik and Radhika Pandey
In 2016, India adopted a flexible inflation targeting framework. A six member MPC, with three internal and three external members was set up to determine the policy rate to achieve the inflation target. The CPI based inflation target was set by the Government at 4 percent with a tolerance band of plus/minus 2 percent for the period from August, 2016 to March, 2021. The review of the target is due in a few months. The tenure of the first MPC came to an end with the August, 2020 meeting. In this backdrop, this paper presents a review of the inflation targeting framework in India.