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The journey of inflation targeting in India

Author

Listed:
  • Radhika Pandey

    (National Institute of Public Finance and Policy)

  • Ila Patnaik

    (Aditya Birla Group of Companies)

  • Rajeswari Sengupta

    (Indira Gandhi Institute of Development Research)

Abstract

It has been eight years since India adopted the inflation targeting (IT) framework for its monetary policy. In this paper we present a comprehensive analysis of the IT regime, addressing several critical aspects. We evaluate the performance of inflation over this period, and review the conduct of monetary policy during and after the Covid-19 pandemic. We also identify key challenges that persist particularly in context of the Impossible Trilemma and highlight issues that may require further examination in order to improve the effectiveness of the IT framework in the future.

Suggested Citation

  • Radhika Pandey & Ila Patnaik & Rajeswari Sengupta, 2024. "The journey of inflation targeting in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2024-022, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2024-022
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2024-022.pdf
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    More about this item

    Keywords

    Inflation Targeting; Reserve Bank of India; Monetary Policy Committee; CPI Inflation; Impossible Trilemma;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance

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