INFLATION TARGETING IN INDIA: AN ANALYSIS OF ITS FEASIBILITY The Indian economy is going through a critical phase with growth rates falling to less than 5%. Predictions for future growth don't look bright either. The budget deficit appears large, reaching 4-5% of GDP, threatening the economy. Retail inflation has also hovered in double digits over the past 24 months. Overall, a low growth rate, high budget deficit, high inflation and a high Canadian dollar have prompted the S&P to warn India to downgrade its investment status to JUNK. Today, inflation targeting seems to be the most appropriate solution to boost the Indian economy. The recent RBI expert committee report also suggests that India should adopt inflation targeting as its sole policy. With the committee's recommendations almost unofficially accepted, India is set to jump on the bandwagon of the much-vaunted inflation targeting framework countries. This situation calls for a heated debate on the pros and cons of the issue. Inflation targeting (hereafter IT) as a monetary framework has been tested for more than two decades by many countries around the world. Currently, 34 countries have officially adopted inflation targeting as their sole monetary policy. This includes 25 developing countries and 9 developed countries. The crucial questions that now require serious discussions are: Is this the right time to undertake inflation targeting? The prospects of inflation targeting in India have been the subject of intellectual debate over the past 15 years. Percy Mistry Committee (07), Raghuram Rajan Committee (08) also recommended IT. But it was later rejected citing lack of financial stability. However, after the adoption of BASE... middle of paper... it avoids speculation, attracts FIIs, which would boost investments and thus propel economic growth. sociologist, we do not have the advantage of a laboratory where we can undertake experiments, our only hope is historical data, which fortunately is available in abundance in this case. IT countries can be broadly classified into two groups: developed countries and emerging market economies. A developed economy differs significantly from transition economies like India in a wide range of structural aspects such as financial institutions, monetary transmission mechanism, central bank independence, etc. This makes the comparison inconsequential. I would therefore like to emphasize the cross-national study focusing on emerging market economies (EMEs) such as the G20 countries which bear a significant resemblance to our economy..