Discuss briefly the recommendations of the expert committee constituted "To revise and strengthen the monetary policy framework".
In short
The 2013 Urjit Patel committee recommended flexible inflation targeting at 4% CPI (plus or minus 2%), decided by a Monetary Policy Committee chaired by the RBI Governor. It also sought published minutes within 14 days and five-yearly reviews, and the 2016 RBI Act amendment enacted the framework.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 269 words
The committee recommended adopting a CPI inflation target of 4% with a ±2% band, formalized in the 2015 Monetary Policy Framework Agreement, to anchor inflation expectations and enhance policy credibility. This nominal anchor replaced the earlier multiple indicator approach, providing clarity and focus.
Monetary Policy Committee3 (MPC)
It proposed a five-member MPC, enacted in 2016 as a six-member body with three RBI officials and three government nominees, to democratize and depoliticize monetary policy decisions, improving transparency and accountability. The MPC’s decisions, voting patterns, and minutes are published within 14 days to ensure openness.
Price Stability with Growth Support
The framework prioritizes price stability while supporting sustainable growth, crucial for states like Andhra Pradesh with sensitive agrarian and industrial sectors. Stable inflation reduces uncertainty, encouraging investment and consumption.
Periodic Reviews and Adaptation
The RBI’s 2025 review of the inflation targeting framework underscores the need for ongoing evaluation to incorporate institutional lessons and evolving economic conditions. Regular reviews every five years will keep the framework relevant.
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Question from the official APPSC Group-I Mains 2016 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.