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Moving to Inflation Targeting

Author

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  • Patnaik, Ila

    (National Institute of Public Finance and Policy)

  • Pandey, Radhika

    (National Institute of Public Finance and Policy)

Abstract

India adopted a flexible inflation targeting framework as a formal legal mandate of the RBI in March 2016. The preamble to the RBI Act, as well as relevant sections in the Act were amended to enable this change. The frame- work entailed many details such as on the rate of inflation to be targeted, the band, the measure, the composition of the Monetary Policy Committee and the objective. One of these sections require that the rate of inflation to be targeted needs to be reviewed every five years. In March 2021, the central government along with the RBI is required to review the target. This paper presents the logic and rationale of the various elements of India's inflation targeting framework.

Suggested Citation

  • Patnaik, Ila & Pandey, Radhika, 2020. "Moving to Inflation Targeting," Working Papers 20/316, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:20/316
    Note: Working Paper 316, 2020
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    References listed on IDEAS

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    Cited by:

    1. Ila Patnaik & Rajeswari Sengupta, 2020. "Impact of Covid-19 on Indian economy: An Analysis of fiscal scenarios," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-026, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Alex, Dony, 2021. "Anchoring of inflation expectations in large emerging economies," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

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