New Delhi, Nov. 17 -- Nearly a decade ago, India's central bank adopted a framework of "flexible inflation targeting", or FIT. It is widely accepted that inflation has been managed well under this mechanism.

Chief economic adviser V. Anantha Nageswaran recently pointed to the remarkable decline in inflation in recent months and suggested that India may even be witnessing a structural transformation in inflation.

Certainly, inflation data for this year support this idea. The retail inflation rate has dropped from 4.3% in January to 0.25% in October; wholesale inflation is down from 2.3% to (-)1.21%.

For an inflation-prone country like India, low inflation rates for a sustained period are an achievement in itself, and the Reserve Bank of...