Monetary Policy Committee (MPC) and Inflation Targeting Framework
India adopted a formal inflation targeting framework through an amendment to the Reserve Bank of India Act, 1934 — specifically Section 45ZA (inserted by the Finance Act, 2016). The Central Government, in consultation with the RBI, sets the inflation target every five years. The current mandate is CPI inflation at 4% (±2% band, i.e., 2%-6% tolerance band).
- The MPC consists of 6 members: 3 from the RBI (Governor as Chair, Deputy Governor in charge of monetary policy, and one RBI officer) and 3 external members appointed by the Government.
- If the MPC fails to meet the inflation target for three consecutive quarters, it must provide a written explanation to the Government — the accountability mechanism under Section 45ZN of the RBI Act.
- CPI in India: compiled by the Ministry of Statistics and Programme Implementation (MoSPI) with base year 2012 (currently being revised to 2024 base year). Weights: Food & Beverages ~45.86%, Miscellaneous ~28.32% (includes transport), Fuel & Light ~6.84%.
- Imported inflation — through oil prices — primarily transmits via Fuel & Light, Transport & Communication, and indirectly through food (agricultural input costs and logistics).
● Tracked since March 10, 2026 · last seen July 17, 2026 · updates as the daily brief publishes
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