Context: Retail Inflation Target
Government has asked the Reserve Bank of India to continue the inflation targeting framework with 4% inflation (2–6% band) for 2026–2031, extending the system started in 2016.
Key Points
India follows flexible inflation targeting → Government sets target → Reserve Bank of India maintains inflation → continuity till 2031 ensures stability.
Monetary Policy
• Reserve Bank of India controls inflation and interest rates
Monetary Policy Committee
• Decides repo rate
• 6 members → 3 Reserve Bank of India + 3 Government
• Statutory body → Reserve Bank of India Act, 1934 (amended 2016)
• Based on Urjit Patel Committee (2014)
