New Delhi, April 29 -- India's flexible inflation targeting (FIT) regime has now been in operation for a decade. The retail inflation target of 4% (with 2 percentage points leeway on either side), originally given to the Reserve Bank of India (RBI) in 2016, was retained in 2021 after the first five-year review and has now been extended through 2031. As India completes 10 years of FIT, what has RBI achieved under this framework and what gaps remain?

Before FIT, India's monetary policy framework suffered from two drawbacks.

First, even when targets of money supply-an intermediate metric considered the main determinant of inflation over long spans of time-were met, its unstable velocity meant inflation was not always in control.

Second, a...