New Delhi, May 6 -- The Reserve Bank of India's (RBI) primary job is to protect the value of the rupee: i.e. domestic price stability. Since the 2016 pact between the central bank and the government, this responsibility was codified as a specific inflation mandate. It is called 'flexible inflation targeting,' since the target is not a number, but a band of 2-6%. RBI is bound by it and answerable to Parliament if it deviates. The pact was renewed in 2021 for another five years.

This monetary reform has stood India in good stead. To be fair, India's inflation management was much better than that of most developing countries, especially in Latin America and Africa, even before the formal inflation-targeting regime was put in place. There ha...