The five year term of the Monetary Policy Committee (MPC) with an inflation target of 4 per cent and band of 2 to 6 per cent is ending in March 2021. The government in consultation with the RBI, will decide the new inflation band for the MPC for next 5 years. While some suggest the existing 4 per cent target should be continued, others are insisting on a higher band. Some are also asking to review the benchmark itself from CPI to core inflation or WPI. However, there are many other critical factors which also need equal attention from the RBI as well as the government. Anand Adhikari, Executive Editor, Business Today explains in detail.Also Read: Bonds jitters setting markets in 'completely new light': BIS

As per the RBI, headline CPI inflation averaged 3.9 per cent in India during October  2016  to  March  2020 (excluding Covid-19 period) with a decline in inflation  volatility, which shows the success of flexible inflation targeting

There is a need for coordinated action between centre and states to reduce taxes because there are indirect taxes levied both of them, says RBI Governor Shaktikanta Das

While RBI will purchase four government securities using the multiple price auction method, it will sell two government securities.

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As per MPC minutes, Governor Shaktikanta Das said the sharp correction in food inflation has improved the near-term headline inflation outlook, although core inflation pressures persist

The growth momentum, however, needs to strengthen further for a sustained revival of the economy and for a quick return of the level of output to the pre-COVID trajectory, Das said.

Although banks have bolstered their capital buffers in comparison to the global financial crisis, the stress in the financial sector's balance sheets could intensify, noted MPC member Michael Debabrata Patra

Taxes levied by the Centre and states constitute more than half of petrol and diesel prices, accounting for 60 per cent of the retail cost of the former and 54 per cent of the latter

The RBI working paper co-authored by RBI Deputy Governor Michael Debabrata Patra,  who is also a member of the six-member monetary policy committee has recommended that maintaining the inflation target at 4 per cent is appropriate for the country

The inflation target could be tweaked to accommodate the government's higher borrowing plan of Rs 12 lakh crore in 2021-22

The band, on the basis of which monetary policy is decided by a six-member committee headed by the central bank governor, was established in 2016

As debt-laden distressed companies fall by the wayside, some cash-rich large companies are practically monopolising their sectors

The $106-billion Tata Group has already thrived for a century and a half - more than twice the age of the Republic of India

The central bank will purchase and sell government securities through multiple price auction method.

The committee will also review the current regulatory approach and recommend suitable measures to strengthen the sector.

Inflation in food basket almost halved to 1.89 per cent in January as compared to 3.41 per cent recorded in December on the back of 15.84 per cent decline in vegetable prices

RBI's database, reports and other evidence show India is credit surplus; large industrial houses have high debt stress, and that easy credit poses serious macro-financial risks to the economy

Reserve Bank says the decision was taken after reviewing current liquidity and financial conditions, and that the move will foster \"congenial financial conditions\"

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