The Economic Survey suggested targeting inflation excluding food, citing supply-induced rather than demand-driven price increases
4% inflation target with a ±2 percentage point tolerance band
Decisions made by a six-member MPC, including three external members, enhancing transparency
The current framework provides clearer market understanding and predictability, and reduces pressure on the RBI governor by involving a committee
Excluding food prices may ignore persistently high food prices' effect on core inflation
Any shift in target requires RBI Act amendment
De-anchoring expectations, suggesting the system can't manage headline inflation
A focus on core inflation could affect real interest rates and impact savings and investment
Any change to the inflation-targeting framework must be supported by thorough research showing the new approach will serve better
Policies should evolve with changing economic realities. Constant debate and refinement are essential for adapting strategies