Inflation Targeting Framework in India Overview

This document is a speech delivered by Dr. Poonam Gupta, Deputy Governor of the Reserve Bank of India, at a seminar discussing India's monetary policy framework, particularly focusing on inflation targeting (IT). The speech outlines the evolution of India's IT framework over the past decade, including the recent renewal of the inflation target of 4 percent with a ±2 percent tolerance band, which has been extended through March 2031. It details the architecture of the framework, the public consultation process for its review, and the outcomes associated with inflation targeting. The document emphasizes the importance of clear communication and transparency in the IT regime, highlighting how India's experience aligns with global trends in inflation targeting. It also discusses the impact of IT on inflation stability and economic growth, noting that India has achieved a significant reduction in inflation while maintaining growth stability. The speech concludes by addressing the consultative approach adopted in the most recent review of the IT framework.