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Four years of the inflation targeting framework

Author

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  • Patnaik, Ila

    (National Institute of Public Finance and Policy)

  • Pandey, Radhika

    (National Institute of Public Finance and Policy)

Abstract

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.

Suggested Citation

  • Patnaik, Ila & Pandey, Radhika, 2020. "Four years of the inflation targeting framework," Working Papers 20/325, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:20/325
    Note: Working Paper 325, 2020
    as

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    File URL: https://www.nipfp.org.in/media/medialibrary/2020/11/WP_325_2020.pdf
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    References listed on IDEAS

    as
    1. Rakesh Mohan & Partha Ray, 2019. "Indian Monetary Policy in the Time of Inflation Targeting and Demonetization," Asian Economic Policy Review, Japan Center for Economic Research, vol. 14(1), pages 67-92, January.
    2. Bhattacharya, Rudrani & Kapoor, Mrigankshi, 2020. "Forecasting Consumer Price Index Inflation in India: Vector Error Correction Mechanism Vs. Dynamic Factor Model Approach for Non-Stationary Time Series," Working Papers 20/323, National Institute of Public Finance and Policy.
    3. Pandey, Radhika & Sapre, Amey & Sinha, Pramod, 2020. "What do we gain from Seasonal Adjustment of the Indian Index of Industrial Production (IIP)?," Working Papers 20/322, National Institute of Public Finance and Policy.
    4. Dubey, Jay Dev, 2020. "Income elasticity of demand for health care and it's change over time: Across the income groups and levels of health expenditure in India," Working Papers 20/324, National Institute of Public Finance and Policy.
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    Cited by:

    1. Chakraborty, Lekha, 2021. "Macroeconomic Framework of Union Budget 2021-22: Reconsidering the Fiscal Rules," Working Papers 21/328, National Institute of Public Finance and Policy.
    2. Mr. Faisal Ahmed & Mahir Binici & Mr. Jarkko Turunen, 2022. "Monetary Policy Communication and Financial Markets in India," IMF Working Papers 2022/209, International Monetary Fund.

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