Govt asks RBI to maintain retail inflation at 4% till Mar 2031

Government mandates RBI to maintain retail inflation at 4% with a 2% margin until March 2031, ensuring economic stability.

The government on Wednesday asked the Reserve Bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five years ending March 2031.

To control the price rise, the government in 2016 gave a mandate to the RBI to keep the retail inflation at 4% with a margin of 2% on either side for five years ending March 31, 2021. Subsequently, in March 2021, the government maintained the same target. This is the second time the government has retained the inflation target.

The central government, in consultation with the Reserve Bank, hereby notifies the inflation target for the period beginning April 1, 2026, and ending on March 31, 2031, a gazette notification issued by the Department of Economic Affairs dated March 25 said.

According to the notification, the inflation target is 4% with an upper tolerance level of 6% and a lower tolerance level of 2%.

India adopted the inflation-targeting framework and formally tasked the central bank with it in 2016.

In its first meeting in October 2016, the six-member MPC was given the mandate to maintain annual inflation at 4% until March 31, 2021, with an upper tolerance of 6% and a lower threshold of 2%.