RBI's Flexible Inflation Targeting (FIT) Framework
India adopted a Flexible Inflation Targeting framework in 2016 through an amendment to the RBI Act, 1934. The framework mandates the RBI to maintain CPI inflation at 4% with a tolerance band of +/- 2% (i.e., 2% to 6%). If inflation exceeds 6% or falls below 2% for three consecutive quarters, the RBI must write to the government explaining the failure and remedial measures. The six-member Monetary Policy Committee (MPC), with three external members, decides the policy repo rate.
- Legal basis: Section 45ZB of the RBI Act, 1934 (amended 2016)
- Inflation target: 4% CPI (+/- 2%) — reviewed every five years; current target valid until March 2026
- MPC composition: 3 RBI members (Governor as Chair, Deputy Governor, one RBI official) + 3 external members appointed by the government
- Failure clause: If inflation stays outside 2-6% band for three consecutive quarters, RBI must report to the government
● Tracked since February 13, 2026 · last seen August 14, 2026 · updates as the daily brief publishes
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