Monetary Policy framework sets targets for RBI

Q.  On which framework the government and the Reserve Bank of India signed an agreement whereby the government has set a target for RBI to bring down inflation below 6% by January 2016?
- Published on 27 Mar 15

a. Monetary Policy Framework
b. Fiscal Deficit Framework
c. Inflation Policy Framework
d. Commercial Framework

ANSWER: Monetary Policy Framework
 
The Agreement, which was signed on February 20 but made public on 2nd Mar’15, veers round to RBI Governor Raghuram Rajan’s view that India too should move towards inflation targeting, which is common in developed economies. Currently, the Centre and the RBI give inflation estimates, but don’t set targets.

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