The Government of India and Reserve Bank of India have jointly implemented a broad spectrum of fiscal and monetary interventions to control inflation and cushion its impact on ordinary citizens, according to a statement released by Minister of State for Finance Pankaj Chaudhary.
The average Consumer Price Index (CPI)-based inflation has declined from 5.6 percent in Q3 of FY 2024–25 to 2.7 percent in Q1 of FY 2025–26. Wholesale Price Index (WPI) inflation registered an even steeper decline—from 2.5 percent to 0.4 percent over the same period. CPI inflation fell sharply to 2.1 percent in June 2025, marking the lowest level in six years. These figures were sourced from the Ministry of Statistics and Programme Implementation and the Office of the Economic Adviser under DPIIT.
Under Section 45ZA of the Reserve Bank of India Act, 1934, the central bank adheres to a flexible inflation targeting framework that maintains CPI inflation at 4 percent with a tolerance band of ±2 percentage points. Chaudhary noted that CPI inflation has remained within this prescribed range for the past three quarters, while WPI does not serve as a formal monetary policy target.
To supplement the monetary framework, the Government has initiated a series of administrative, fiscal and trade policy measures to ease price pressures and stabilize household budgets. These include augmentation of buffer stocks for essential food items, strategic offloading of procured grains in open markets, facilitation of imports and imposition of export restrictions during supply shortfalls, application of stock limits to expand availability of select commodities, and subsidized retail sales under the Bharat brand. The government has also distributed food grains free of cost to around 810 million beneficiaries under the National Food Security Act.
Income-side support measures were highlighted as well. The Finance Ministry confirmed full income tax exemption for annual earnings up to ₹1.2 million, and up to ₹1.275 million for salaried individuals availing the standard deduction—helping to increase disposable income and support consumption amid falling inflation.
On the monetary side, RBI’s Monetary Policy Committee cumulatively raised the repo rate by 250 basis points between May 2022 and February 2023—moving from 4 percent to 6.5 percent—and maintained the rate through January 2025. Following the significant deceleration in headline inflation, the central bank initiated a 100 basis point cut in policy rate since February 2025 to support growth momentum.
The combination of calibrated monetary tightening and targeted fiscal interventions has delivered broad-based inflation relief. Officials noted that this outcome reflects a balanced approach to price stability and economic expansion, underscoring institutional coordination and data-driven responsiveness to evolving macroeconomic conditions.
