Inflation Targeting in India: Select Issues
29 Pages Posted: 2 Dec 2014
Date Written: December 2, 2014
The adoption of inflation targeting in India has been a much debated topic which also becomes a challenge for the emerging economy. Though inflation targeting has already been adopted in many emerging and advanced countries, acceptability in India is a matter of concern. The paper argues that an emerging country like India needs to consider the composition of consumer price index; state of macro econometric models; and young demographics, unemployment rate and lack of social security before adopting inflation targeting.
To modernize the monetary policy framework, India could consider introducing regular review of the regional economy; instituting a Monetary Policy Committee; and separating debt from monetary management, the paper argues.
Keywords: Monetary policy framework, inflation, inflation targeting, debt management
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