Centre asks RBI to maintain 4% retail inflation target until March 2031
The Union government has asked the Reserve Bank of India (RBI) to continue targeting retail inflation at 4% with a margin of 2% on either side for another five years, extending until March 31, 2031. This marks the second time the government has retained this inflation target, which was first mandated to the RBI in 2016 for the period ending March 31, 2021, and subsequently maintained in March 2021. The notification, issued by the Department of Economic Affairs, specifies an upper tolerance level of 6% and a lower tolerance level of 2%.
Key Points
- The Union government has notified the RBI to maintain the retail inflation target at 4% until March 31, 2031.
- The target includes a margin of 2% on either side, setting an upper tolerance level of 6% and a lower tolerance level of 2%.
- This is the second time the government has retained the 4% inflation target, which was initially mandated in 2016.
- The inflation-targeting framework was formally adopted in India in 2016 to control price rise.
- The notification was issued by the Department of Economic Affairs.
Exam Facts
- Retail inflation target: 4% (with 2% margin on either side).
- Target period: April 1, 2026, to March 31, 2031.
- First mandate for inflation target: 2016, for period ending March 31, 2021.
- Notification issued by Department of Economic Affairs dated March 25.
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