REGULATORY · MARKET STRUCTURE · INDIA
Government notifies 4% inflation target through Mar 2031
Change
The central government set the retail inflation target at 4% with a 2 percentage-point upper and lower tolerance for the period April 1, 2026–March 31, 2031.
Why it matters
The central government issued a notification setting the retail inflation target at 4% with an upper tolerance of 6% and a lower tolerance of 2%. The target period runs from April 1, 2026, to March 31, 2031. The notification follows consultation with the Reserve Bank. The target repeats the same 4% objective previously set and retained in earlier five-year cycles.
Implications
- · Monetary policy operations must be directed toward keeping retail inflation within the 2%–6% band through March 31, 2031.
- · The 4% objective establishes a five-year performance benchmark for inflation management from April 1, 2026.
- · Continued policy continuity from prior target cycles through operational framing of inflation objectives.
Who is affected
- · Banks
What to watch
- · Effective date: April 1, 2026
- · Target end date: March 31, 2031
Source
Topics
World & Politics Policy & Regulation Business & Markets Economy Finance & Banking Monetary Policy