India’s Inflation Target Extended (2026–2031) Context: The Union government asked the Reserve Bank of India (RBI) to target retail inflation at 4% with a margin of 2% on either side for another five years ending March 2031. Continuation of Existing Policy This is the second extension of the same inflation target framework. Initially introduced in 2016, valid until 2021. Extended again in 2021, and now continued till 2031. Policy Framework Inflation targeting was formally adopted in 2016, giving the Reserve Bank of India the responsibility to control price rise. The framework operates through the Monetary Policy Committee (MPC), a six-member body. Current Facts Consumer Protection Authority The Central Consumer Protection Authority (CCPA), established under the Consumer Protection Act, 2019, undertakes the tasks of protecting consumer rights, regulating misleading advertisements, and ensuring product quality. About Retail Inflation Retail inflation means the increase in prices of everyday goods and services that people purchase for personal consumption—basically, what consumers pay in markets and stores. It is tracked using the Consumer Price Index, which monitors the price movement of a fixed basket of commonly used items. Base year: In India, 2024 is currently used as the reference year for calculating CPI. The figures are published every month by the Ministry of Statistics and Programme Implementation. The Reserve Bank of India tries to keep retail inflation within 2% to 6%, maintaining a balance between price stability and economic growth. Variable Rate Repo (VRR) Auction Context: The Reserve Bank of India infused ₹55,837 crore into the banking system through a 3-day Variable Rate Repo (VRR) auction to ease tightening liquidity conditions. About Variable Rate Repo (VRR) Auction VRR is a monetary policy mechanism used by the RBI to supply funds to banks when cash in the system is limited. Unlike the fixed-rate repo, the interest…
