Inflation targeting: what's the hurry?

Abstract

Inflation targeting could be the next major policy measure adopted in India as the proposal is being reviewed by the Reserve Bank of India (RBI). The finance minister in a recent meeting of the RBI Board is reported to have observed that inflation targeting should be fixed by the central government. Earlier, in late January 2014, the Expert Committee to Revise and Strengthen the Monetary Policy Framework (RSMPF) had submitted the report recommending inflation targeting.

The RSMPF committee proposes that the inflation targeting approach be adopted by January 2016, with headline consumer price index as a nominal anchor. But two issues flagged by the RSMPF committee need attention - composition of the monetary policy committee and debt management by RBI, even if supply side factors, which can be summed up as the "onionisation of price indices", are ignored. Read more at: https://www.business-standard.com/article/opinion/charan-singh-inflation-targeting-what-s-the-hurry-114033000765_1.html