While price stability remains a key objective, an inflation targeting framework alone is inadequate because India is subject to a number

of shocks and special regulatory and administrative structures not necessarily present in other countries. These shocks include recurrent supply shocks from vagaries of the monsoon; large weight of food prices (46-70 percent) in various consumer price indices; large differences in consumption habits across different regions and thus large differences in how these shocks affect spending power; large fiscal deficits and market borrowings by both the central and state governments; and impediments to monetary transmission due to administered interest rates in some government savings instruments. (Mohan, 2007) Apart from the Indian specifics, the inflation targeting framework was well before the current crisis hit us considered to be too narrow and unsuitable given the complexities that a central bank faces in its objectives (Mohan, 2004). The global financial crisis has now justified such concerns.