EconomySaturday, 28 March 2026·The Hindu
India extends 4% inflation targeting framework till March 2031 under RBI Act Section 45ZA
The Union government extended India’s flexible inflation targeting framework for 2026-2031, keeping the 4% retail inflation target and 2%-6% tolerance band.
Key highlights
Direct fact
In March 2026, the Government of India, in consultation with the Reserve Bank of India, extended the flexible inflation targeting framework from 1 April 2026 to 31 March 2031, retaining the 4% retail inflation target under Section 45ZA of the RBI Act, 1934.
Key specifics
- Target retained: 4% retail inflation for the period ending March 2031.
- Tolerance band fixed at 2% to 6%, with 6% as the upper limit and 2% as the lower limit.
- As of February 2026, India’s retail inflation stood at 3.21%.
- The framework was first introduced in 2016 as Flexible Inflation Targeting (FIT).
- If inflation stays outside the 2%-6% band for 3 consecutive quarters, the RBI must report to the government.
Exam lens
Economy and RBI policy question, 4% target, 2%-6% band, Section 45ZA, 2016 FIT, 31 March 2031 end date — TNPSC may ask the legal basis and the accountability clause.