India pursued a varying set of objectives with limited instruments, but both objectives and instruments evolved from the early 1990s, and India eventually adopted loose inflation targets which it was able to pursue with some success.
| Years | Targets and attainment | Classification |
| 1974-2014 | exchange rate initially pegged but for most of period is adjusted frequently and in varying ways; initially some state planning but some autonomy for banking system, planning weakened by liberalisation over time, particularly from early 1990s; fiscal dominance always possible but in practice under some control; monetary policy instruments gradually shift over period from direct to indirect; central bank has developmental responsibilities but increasingly serious price stability concern; some implicit/explicit monetary targeting 1985-6 to 1997-8, target achieved only four (separate) years, replaced in 1998 by multiple indicators approach | loosely structured discretion LSD |
| 2014-16 | 2014 adoption of ‘glide path’ down towards medium term inflation target, targets met though inflation expectations above target; measures to improve monetary transmission; 2016-17 demonetisation of larger denomination banknotes causes significant growth shock | loose converging inflation targeting LCIT |
| 2017-23 | formal adoption of inflation targeting August 2016, with continuous wide targets consistently met or (2020, 2022, 2023) near-met, with financial sector expectations typically within target range but household expectations above; monetary transmission mechanism remains weak; large impact from, and trouble addressing, Covid-19, but limited rise inflation 2022-23; 2023 some reintroduction of exchange rate stabilisation | loose inflation targeting LIT |
Selected IMF references: RED 1986 pp25-8; RED 1988 pp14, 18-19; MTP 1990 chs. II, VI; BPs 1995 chIV; SI 2000 chs V, VI; SR 2015 pp8-10; SR 2016 pp12-14; SR 2017 pp15-17, 29; SR 2018 pp26, 33; SR 2019 pp16-19, 33; SR 2021 pp5-6, 19-21, 31; SR 2022 pp12-14, 28; SR 2023 pp5-7, 19, 35.
Additional sources: Mohanty and Mitra (1999); Reserve Bank of India (2013), ch4 especially Annex 4.12, ch14 especially Annex 14.1..
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Monetary Policy Frameworks 