CEA Krishnamurthy Subramanian for retaining 2-6% inflation aim band

CEA Krishnamurthy Subramanian for retaining 2-6% inflation aim band

"I would insist that this battle that we have fought against inflation is something that we cannot let go.

FPJ BureauUpdated: Thursday, March 12, 2020, 08:34 AM IST
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Chief Economic Advisor Krishnamurthy Subramanian |

New Delhi: At a time when the Reserve Bank of India has initiated discussions on reviewing its inflation targeting-based monetary policy framework, government's Chief Economic Adviser Krishnamurthy Subramanian is in favour of sticking to the existing inflation band of 2-6%.

"I would insist that this battle that we have fought against inflation is something that we cannot let go. And therefore, we should continue to be in the band of 2-6%,” Subramanian told Cogencis in an interview.

According to the current monetary policy framework, adopted in 2016, the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth.

The government has set the inflation target at 4%, within a band of 2-6%. This is applicable till Mar 31, 2021. As such, the flexible inflation target will be up for review a few months after the three external members of the committee are replaced in October.

Terming battles against inflation as hard, Subramanian said that he expects headline inflation to come down to 4% around July because of a fall in food prices.

"The wedge between headline and core has been driven by food price inflation and with the onion prices having cooled off quite a bit, so I would expect by July or so the headline to come back to core, to around 4%. The core inflation may also come down because of decline in oil prices and on the global demand conditions as well," Subramanian said.

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