Overview
- The Reserve Bank of India released a discussion paper on August 21 and invited emailed submissions from stakeholders and the public through September 18, 2025.
- Consultation questions cover whether to target headline or core inflation, keep the 4% objective, revise or remove the 2–6% tolerance band, or shift to a range-only approach.
- The paper defends the 4% anchor and prioritising headline CPI, warning that raising the target could be read as diluting the framework and noting most inflation-targeting countries use headline inflation.
- RBI flags geo-economic uncertainty, commodity price swings, climate-related food shocks and payment-system changes as reasons to reassess targeting mechanics.
- After consolidating responses, the RBI will provide its views to the government, which must set the CPI target under Section 45ZA by end-March 2026.