India’s inflation target of 4% and the estimates of threshold inflation need to be updated, according to RBI deputy governor Michael Patra. In an article, co-authored with Indranil Bhattacharyya, a director in the RBI’s monetary policy department, Patra said this is necessary as estimates for several economic parameters, such as the natural real interest rate, have undergone changes. The article appeared in the May 14 edition of the Economic & Political Weekly. “India’s inflation target of 4% is in alignment with trend inflation right up to 2019-20. As data points for the pandemic period form, this estimate will have to be updated along with those for the natural real rate of interest that was placed in the range of 1.6-1.8% in the pre-pandemic period,” the authors wrote, adding, “likewise, estimates of threshold inflation—beyond which inflation retards growth—which worked out to 6% in the pre-pandemic period, will also need re-estimation as the output gap closes,” they added.