India will formally implement the inflation target agreed with outgoing Reserve Bank of India Governor Raghuram Rajan, a senior government official said, adding that progress was being made on forming a new Monetary Policy Committee.
The official said the government would on Friday table the parliamentary notification of a central inflation target of 4 percent, plus or minus 2 percent, which is in line with the goal the government originally agreed with Rajan.
Candidates were being shortlisted for the six-member MPC but it was unlikely that the panel will be formed in time for next Tuesday's RBI policy meeting, although it may be in place when Rajan steps down in early September.
"All I can say is that we are currently shortlisting candidates (for the MPC). And it won't get formed before the Aug. 9 policy," the official told Reuters, requesting anonymity.
Rajan, the former International Monetary Fund chief economist who is highly regarded by financial markets, will step down on Sept. 4 after three years at the helm of the RBI during which his policies helped to cut inflation in half.
He dropped a bombshell in June by announcing he would not seek a second term, but has sought to cement his legacy by completing the shift to formal inflation targeting and staffing up the six-member MPC before he steps down.
Intense speculation persists over the identity of his successor. Although the field has narrowed, officials in Prime Minister Narendra Modi's office have not confirmed whether any announcement is imminent.
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