Given the deleterious effects of inflation on distribution of income, there is an imperative need in developing countries to keep the inflation rate as low as possible.
In the last year’s Economic Survey, it was stated that “As world inflation rates are currently of the order of 0 to 3 percent, 4 to 6 percent inflation rate could be regarded as an acceptable level for India at present.” This order of inflation has been, it may be noted, built into the monetary operating framework of the RBI.