A question of compliance

Data limitations should not be an escape clause for not honouring obligations under the inflation targeting regime

Recent commentary in the media has noted with concern a subtle shift in the way the Reserve Bank of India (RBI) has dealt with the responsibility of honouring its inflation mandate. Many commentators rightly believe that the central bank may have erred by prioritising growth over inflation. The current phase of inflation may be transitory, but the Indian experience of inflation feeding more inflation cannot be easily forgotten. There is, therefore, a fervent appeal that the central bank should soon return to its primary mandate of adhering to the inflation target of 4 per cent, although with a permissible upper