Monetary policy in India underwent a regime change during 2016-17. The amendments to the Reserve Bank of India (RBI) Act, which came into force on June 27, 2016, provided it the legislative mandate to operate the monetary policy framework with its objective explicitly defined as ‘to maintain price stability while keeping in mind the objective of growth.’
On August 5, 2016, the Government notified the inflation target as 4 per cent year-on-year growth in CPI-combined inflation with upper and lower tolerance levels of 6 and 2 per cent, respectively. The amended RBI Act also provides for the formation of a six-member ....
