India's Inflation Management Framework

India adopted the Flexible Inflation Targeting (FIT) framework in 2016 under an amendment to the RBI Act. The Monetary Policy Committee (MPC), a six-member body (three RBI members, three external members appointed by the Government), is mandated to maintain CPI inflation at 4%, with a tolerance band of ±2% (i.e., 2%–6%). If inflation remains outside this band for three consecutive quarters, the RBI must submit a report to the Government explaining the failure and the remedial steps proposed.