REUTERS - The government and the Reserve Bank of India bank have agreed an overhaul to monetary policy that will be the most significant in a generation, with changes that include an inflation target from the fiscal year beginning in April.
For story, India overhauls monetary policy with inflation target, click http://in.reuters.com/article/2015/03/02/india-rbi-idINKBN0LY0B320150302
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Following are key features of the document published on the finance ministry's website on Monday:
POLICY DETAIL
* India's monetary policy framework will be operated by the Reserve Bank of India.
* India's monetary policy framework will aim to "maintain price stability while keeping in mind the objective of growth".
INFLATION TARGET
* India's central bank will aim to bring inflation below 6 percent by Jan 2016.
* Consumer inflation target for 2016/2017 and subsequent years will be 4 percent +/-2 percentage points.
MISSING THE TARGET
* India central bank shall be seen to have failed to meet its target if inflation is more than 6 percent for three straight quarters in 2015/16 and subsequent years.
* From 2016/17, it will also be seen to have missed its target if inflation is below 2 percent for three straight quarters in 2016/17 and subsequent years.
EXPLAINING THE MISS
* If the central bank misses the inflation target, it will send a report to the government citing reasons and remedial actions.
* The central bank will also need to give an estimated time-period within which it expects to return to the target level.
COMMITTEE
* The change is expected to include the introduction of a Monetary Policy Committee, but there was no detail on that in the document released on Monday.
(Compiled by Neha Dasgupta; Editing by Clara Ferreira Marques)
