Inflation targets not met – MPC to examine today
Distilled Policy Brief
- The policy repo rate was raised progressively from 4% in April 2022 to 5.9% in September 2022 to curb inflation.
🎯 Prelims High-Yield Examination Points
Key points: RBI inflation target 4% ±2% tolerance, off‑cycle MPC meeting due to inflation >6% for 9 months, repo rate hikes from 4% to 5.9% in 2022.
⚖️ Mains Analytical & Syllabus Linkages
Discuss RBI’s inflation‑targeting framework, role of MPC, policy tools like repo rate, CPI vs WPI dynamics, and implications for economic stability.
🎯 UPSC Prelims Practice Drill
Under the inflation‑targeting framework introduced by the 2016 amendment to the RBI Act, what is the current retail inflation target and its permissible tolerance band?
- [A] Target of 4% with a lower limit of 2% and an upper limit of 6%
- [B] Target of 4% with a lower limit of 3% and an upper limit of 5%
- [C] Target of 5% with a lower limit of 3% and an upper limit of 7%
- [D] Target of 3% with a lower limit of 1% and an upper limit of 5%
▶ Reveal Official Answer & Analytical Explanation
The text states that the inflation‑targeting framework sets the retail inflation target at 4%, with a lower tolerance limit of 2% and an upper tolerance limit of 6%. The other options misstate either the target level or the tolerance band.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.