A final decision on the proposal to raise the retail inflation target is still awaited as some experts in the government and at the central bank prefer status quo. “Using actual data for the first three quarters and RBI’s expectation for the last quarter, the annual CPI inflation rate may turn out to be 6.4% for FY21. Srivastava said, “Given the past experience, it may be desirable to raise the mid-point of the CPI inflation target range from 4% to 5%. This may imply a nominal GDP growth rate that is higher than the real GDP growth rate by about 3-4% points on average. Thus, the target range for CPI inflation would be 3% to 7%.

Source: Mint January 28, 2021 01:24 UTC