Flexible Inflation Targeting
India's monetary policy framework, adopted after the Monetary Policy Framework Agreement (2015) and amendment of the RBI Act, 1934, under which the RBI targets CPI inflation of 4% with a tolerance band of plus or minus 2 percentage points.
On UPSC.wiki
Current affairsFrontier Nagaland Territorial Authority (FNTA) Act 2026: Presidential Assent and Autonomy for Six Eastern Nagaland DistrictsPresident Droupadi Murmu gave her assent to the Frontier Nagaland Territorial Authority (FNTA) Bill 2026, which was unanimously passed by the Nagaland Legislative Assembly on September 3, 2026. The Act creates a 62-member autonomous authority with powers over 46 subjects for six underserved eastern Nagaland districts, addressing a longstanding demand of the Eastern Nagaland People's Organisation (ENPO). Current affairsPM-AJAY Scheme: 18,093 Villages Declared Adarsh Grams, Rs 1,730 Crore Released for SC DevelopmentThe Ministry of Social Justice and Empowerment has declared 18,093 villages as Adarsh Grams under the Pradhan Mantri Anusuchit Jaati Abhyuday Yojana (PM-AJAY) — a 100% centrally sponsored scheme launched in FY 2021-22 to uplift Scheduled Caste-dominated villages. Separately, Rs 1,730 crore has been released to states under the scheme's Grants-in-Aid component to skill over 2.5 lakh SC beneficiaries. The scheme merges three earlier SC welfare schemes into a unified framework. Current affairsSEBI MF Lite Framework: 1 Finance Gets First In-Principle Approval for Passive-Only AMC; Closing Auction Rules Revised1 Finance received SEBI's first in-principle approval for an Asset Management Company (AMC) licence under the new MF Lite framework on October 19, 2026 — a lighter regulatory regime designed exclusively for passively managed mutual fund schemes (index funds and ETFs). Separately, SEBI revised the equity market Closing Auction Session (CAS) framework effective December 7, 2026, restructuring the 10-minute closing window while retaining the 30-minute VWAP method for derivatives settlement. Current affairsIDBI Bank Privatisation: Cabinet Approves ₹52,878 Crore Sale of 60.72% Stake to Fairfax Financial Holdings — India's Largest Banking Sector FDIThe Union Cabinet on 14 October 2026 approved the strategic disinvestment of IDBI Bank, clearing the sale of a combined 60.72% stake held by the Government of India and the Life Insurance Corporation of India to Fairfax Financial Holdings for ₹52,878 crore (approximately US$6.3 billion) — the largest foreign direct investment ever recorded in India's financial sector. The transaction remains subject to Reserve Bank of India's fit-and-proper assessment of the acquirer. Current affairsIndia's WPI Inflation Surges to 11.39% in September 2026: Fuel and Food Prices Drive Broad-Based Price PressureIndia's Wholesale Price Index (WPI)-based inflation rose sharply to 11.39% in September 2026 from 9.92% in August 2026, driven primarily by a 25.85% surge in fuel and power prices alongside elevated food and manufactured-goods inflation. The data, released by the Office of Economic Adviser under DPIIT on October 14, 2026, signals broad-based upstream price pressure with implications for monetary policy and cost-of-living trends. Current affairsIndia-Canada CEPA Negotiations: Second Round Concluded, Both Sides Target Year-End Conclusion of Free Trade AgreementIndia and Canada are accelerating negotiations for a Comprehensive Economic Partnership Agreement (CEPA), with both sides backing an early conclusion by end of 2026. The second round of negotiations was concluded in May 2026 at New Delhi, covering goods, services, intellectual property, and technical barriers. The agreement aims to expand bilateral trade to CAD 70 billion by 2030 and addresses diversification of India's supply chains in critical minerals and clean energy. Current affairsINS Triput Commissioned: Indian Navy Inducts First Indigenously Built Follow-on Talwar-Class Stealth FrigateThe Indian Navy commissioned INS Triput in October 2026 — the first of two Follow-on Talwar-class guided-missile frigates (Project 1135.6) built entirely in India at Goa Shipyard Limited (GSL). Constructed with 51% Indian steel, INS Triput is a landmark in India's naval indigenisation drive under Make in India, reinforcing India's maritime capability in the Indian Ocean Region. Current affairsExercise KONKAN-26: India-UK Annual Bilateral Naval Exercise at Plymouth with INS TrishulExercise KONKAN-26, the annual bilateral maritime exercise between the Indian Navy and the UK Royal Navy, is being conducted off Plymouth, England from October 8–15, 2026. India's guided-missile stealth frigate INS Trishul is participating in harbour-phase professional exchanges and at-sea tactical manoeuvres. The exercise reinforces the Comprehensive Strategic Partnership outlined in the India-UK Vision 2035 and demonstrates the two navies' commitment to open, secure, and free seas. Current affairsNobel Prize in Economics 2026: Robert E. Hall and Michael Woodford Honoured for Macroeconomic Stabilisation ModelsThe Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2026 was awarded on October 12 to American economists Robert E. Hall (Stanford University) and Michael Woodford (Columbia University) for their work on the "microeconomic foundations of macroeconomic stabilisation." Their models underpin how central banks and governments use fiscal and monetary policy to smooth economic boom-bust cycles, and are directly relevant to how institutions like the RBI and IMF calibrate their responses to economic shocks. Current affairsRBI Special Dollar Window for PSU Oil Marketing Companies: Mechanism, Rupee Support, and Exam RelevanceThe Reserve Bank of India (RBI) announced on 10 October 2026 a dedicated special dollar window for India's three public sector oil marketing companies — Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL), and Bharat Petroleum Corporation (BPCL) — effective from 12 October 2026. The measure aims to reduce pressure on the Indian rupee by channelling crude oil-related foreign exchange demand through a dedicated RBI facility rather than the open interbank market. Current affairsDDU-GKY 2.0: 70,000 Rural Youth Begin Skill Training Across 24 States/UTs in October 2026Approximately 70,000 rural youth across 2,015 training batches in 24 states and Union Territories began skill training under DDU-GKY 2.0 (Deen Dayal Upadhyaya Grameen Kaushalya Yojana 2.0) in October 2026. The revamped scheme, running for 2026–28, targets over 9 lakh rural youth across 31 states/UTs in NSQF-aligned, placement-linked training programmes run in Public-Private Partnership mode. Current affairsRBI MPC October 2026 Decision: Repo Rate Raised to 5.5% — First Hike Since February 2023, Stance Shifts to Calibrated TighteningThe Reserve Bank of India's six-member Monetary Policy Committee (MPC), at its October 7, 2026 meeting chaired by Governor Sanjay Malhotra, unanimously raised the repo rate by 25 basis points to 5.5% — the first increase since February 2023 — and shifted the policy stance to "calibrated tightening" as rising inflation and elevated global oil prices prompt the central bank to reverse its 2025 easing cycle.
In previous-year questions
- Under the Flexible Inflation Targeting (FIT) framework, which body is legally responsible for setting the inflation target in India?UPSC · Current Affairs
- Which index replaced the Wholesale Price Index (WPI) as the deflator for India's GDP under the revised National Accounts Statistics 2026?UPSC · Current Affairs
- Under RBI's Guidelines for Acquisition of Shares and Voting Rights in Private Sector Banks (2023), what happens when an entity crosses the 10% ownership threshold in a private sector bank, as LIC is trying to avoid by capping its ICICI Bank acquisition at 9.99%?UPSC · Current Affairs
- India's Flexible Inflation Targeting (FIT) framework, under which the RBI's Monetary Policy Committee (MPC) operates, mandates keeping Consumer Price Index (CPI) inflation at a specific target. What is the inflation target and the tolerance band under the FIT framework?OTHER · Current Affairs
- Under which section of the Banking Regulation Act, 1949 does the RBI's prior approval become mandatory for the appointment or removal of a banking company's Managing Director and CEO?UPSC · Current Affairs
- Under India's Flexible Inflation Targeting (FIT) framework adopted in 2016, what is the mandated Consumer Price Index (CPI) inflation target and its tolerance band?UPSC · 2026 · Current Affairs
- The Union Cabinet in October 2026 approved the strategic disinvestment of IDBI Bank, clearing the sale of a combined 60.72% stake to which entity for approximately ₹52,878 crore?UPSC · 2026 · Current Affairs
- The IDBI Bank privatisation (2026) requires approval from which regulator before legal ownership transfer to Fairfax Financial Holdings can be completed?UPSC · 2026 · Current Affairs