Q- With reference to the -Inflation targeting- in India- consider the following statements-1- The Monetary Policy Committee in consultation with the central government sets the target-2- The target is fixed on an annual basis-3- While there is an upper limit at present for it- no lower limit was set up-Which of the above statements is-are correct-

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Standard XI

Statistics

Consumer Price Index

Q. With refer...

Question

Q. With reference to the “Inflation targeting” in India, consider the following statements:
Which of the above statements is/are correct?

1 and 2 only

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2 only

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1 and 3 only

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None of the above

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Solution

The correct option is D
None of the above
Explanation:

Statement 1 is incorrect: As per the section 45ZA of the Reserve Bank of India Act, 1934, the Central Government, in consultation with the Reserve Bank of India (RBI) fixes the inflation target.

Statement 2 and 3 are incorrect: In 2016, the central government fixed the inflation target of 4 percent with an upper and lower limits of 6 and 2 percent respectively. This target is applicable till March 31, 2021.

More information:
What happens when RBI fails to meet the inflation target?
RBI shall set out a report to the Central Government stating the

reasons for such a failure

remedial actions proposed to be taken by RBI

an estimate of the time-period within which the inflation target shall be achieved

Suggest Corrections

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