India Pegs Inflation Target At 4%

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According to media reports, the Modi government has fixed an annual inflation target of 4 per cent with a range of plus/minus 2 per cent, for the next five years, for Asia's third biggest economy.

"In view of the powers conferred by Section 45ZA of the RBI Act 1934, the central government, in consultation with the bank, hereby notifies the inflation target beginning from the date of publication of this notification and ending on the March 31, 2021," said the Government notification tabled in the Lok Sabha, the PTI reported.

Read: Difference between CPI and WPI inflation


India Pegs Inflation Target At 4%
As per the notification, the upper tolerance level for inflation in the country has been set at 6 per cent with lower limit at 2 per cent.

Retail inflation rose to 5.77 percent in June 2016 from 5.76 per cent in May 2016 driven by higher food prices.

With consumer inflation now at levels very close to the government's newly notified upper tolerance limit, the Reserve Bank of India (RBI) has a very thin room to cut interest rates when it meets on Tuesday, August 9, 2016, which will be the last monetary policy meet for Raghuram Rajan as the RBI Governor.

The centre had amended the RBI Act through Finance Act, 2016.

Read more about: inflation
Story first published: Monday, August 8, 2016, 8:30 [IST]
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