What is inflation targeting in context of India ........

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What is inflation targeting in context of India?

It is an economic policy where the government targets a specific rate beyond which the inflation should not proceed and Central bank is given no role.

It is an economic policy where the central bank targets a rate of inflation and then steers the actual rate of inflation towards it by means of monetary policy instruments.

It is an economic policy whereby both central government and central bank both target a specific rate of inflation beyond which the inflation should not proceed.

It is an economic policy where market forces are allowed to target the inflation rate without the interference of central bank or government.

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Explanation:

The Reserve Bank of India and Government of India signed a Monetary Policy Framework Agreement on 20th February 2015. As per terms of the agreement, the objective of monetary policy framework would be primarily to maintain price stability, while keeping in mind the objective of growth. The monetary policy framework would be operated by the RBI. RBI would aim to contain consumer price inflation within 6 percent by January 2016 and within 4 percent with a band of (+/-) 2 percent for all subsequent years.