The Reserve Bank of India (RBI) is supposed to target 4 per cent inflation, as measured by the consumer price index, with a leeway of 2 percentage points, which is actually a leeway of 50 per cent (2/4 x 100). However, for the last three quarters, the actual inflation rate has been well above the upper limit of 6 per cent. The RBI held a meeting on November 3 to draft a letter of explanation to the Government of India (GoI).
Though the RBI’s formal explanation has not been made public so far, it is quite clear from various other
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