time dealing with the adoption of inflation targeting. the amended act gives a clear mandate to the reserve bank to maintain price stability, keeping in mind the objective of growth. price stability has been numerically defined as maintaining a headline cpi inflation target of 4. 0 per cent with a tolerance band of + / 2 per cent. 9 the tolerance band provides flexibility to accommodate growth and financial stability concerns, supply shocks, and measurement and forecast errors. the target is set by the government of india in consultation with the reserve bank for a period of 5 years. 10 8. another major change with the amendment of the act in 2016 was the shift from a governor - centric monetary policy decision making process to a collegial decision - making body in the form of the monetary global emerging market investor, morgan stanley research, august 5, 2013. 8 https : / / rbidocs. rbi. org. in / rdocs / publicationreport / pdfs / ecomrf210114 _ f. pdf 9 the justification of the target and band is premised on the following. empirical investigation suggested that inflation above 6. 0 per cent is inimical to growth. moreover, the output gap was found to be close to zero during the period q3 : 2003 - 04 to q1 : 2006 - 07 during which average cpi inflation was at around 4 per cent. these estimates provided empirical support to a range of 4 to 6 per cent for the inflation target. 10 the current target of 4 per cent plus / minus 2 per cent is applicable till march 2026. policy committee ( mpc ). 11 the mpc is entrusted with the responsibility of deciding the policy repo rate with the objective of achieving the inflation target, keeping in mind the objective of growth. i am happy to recall that prof. pami dua12 was an esteemed member of the first mpc and the reserve bank benefitted immensely from her distinguished academic rigour and practical insights. i have personal experience of the same. the decisions of the mpc are taken by a majority of votes among the members present. in the event of a tie, the governor has a second or casting vote. 13 after the conclusion of every mpc meeting, the rbi publishes the resolution adopted by the mpc. in addition, governor ’ s statement and press briefings are the other modes of policy communication. the minutes of the individual members of the mpc are published on the 14th day after the meeting. the rbi is

fluid and i expect that we will look ahead as we look back. it's my privilege to be heading the rbi at such an historic moment. first of all, i want to say that the rbi has earned an enviable reputation for competence, for its professionalism and its integrity. we will of course be having events to commemorate the anniversary. but what i do want to do is to use the jubilee as an occasion to have rbi understand that they must make a difference and i want the people of india to understand that the rbi does something that's important in their daily lives. i want our staff to understand that they can make a difference. cb : looking back on the reserve bank's first 75 years, are there any lessons from history that the institution could usefully apply in the current circumstances? ds : i'm afraid i'm not a student of history but 75 years is a long time and there are certainly lessons from our experience. the central bank has performed the role of being an effective counterpoint to government which often has to concentrate on short - term objectives. on its part, the reserve bank has been able to take a medium - term view and what is prudent and optimal comes out of this synthesis. we should continue to do that. rbi has had a culture of gradualism, moving forward decisively but only after weighing carefully the pros and cons. it's like the crossing a river by feeling the stones metaphor. moving forward we need to understand that monetary policy is going to be more difficult because of the increasing forces of globalisation. as i mentioned earlier, we need to acquire greater proficiency in that. cb : where do you believe your views differ from those of your predecessor, y. v. reddy? where are there similarities? ds : dr reddy is an eminent economist who has served the rbi with dignity and distinction. he's a difficult act to follow. we are similar in that our aims are to keep the economy on a high - growth path with price stability and increasingly, financial stability. however, the difference between him and me will be the specific circumstances that we encounter when we try to deal with that mandate. dr. reddy has had to deal with two episodes of inflation, one demand driven and the other supply driven. he has also had to deal with a flood of capital flows. i have had a baptism by fire, taking over at a time of crisis, where i've had to act quickly.