With reference to inflation targeting by the Reserve Bank of India, consider the following statements:
1. In May 2016, the RBI Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework.
2. Under Section 45Z A, the Central Government, in consultation with the RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in five years.
3. On March 31, 2021, the Central Government retained the inflation target of 6 percent with the tolerance band of ± 2 percent for the next 5-year period - April 1, 2021 to March 31, 2026.

Question

Question

This question was previously asked in

OPSC OAS 2023 Prelims (General Studies) Official Paper-I

Answer 1

The Correct answer is Option 4.

Key Points

In May 2016, the RBI Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework (1): The RBI Act was amended to establish the flexible inflation targeting framework. Hence Correct.
Under Section 45Z A, the Central Government, in consultation with the RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in five years (2): The inflation target is indeed determined in consultation with the RBI and is reviewed every five years. Hence Correct.
On March 31, 2021, the Central Government retained the inflation target of 6 percent with the tolerance band of ± 2 percent for the next 5-year period - April 1, 2021 to March 31, 2026 (3): The government retained the inflation target of 6% with a tolerance band of ± 2% for the specified period. Hence Correct.
All statements regarding inflation targeting by the Reserve Bank of India are correct. Thus, the correct answer is Option 4