Under the recommendations of the panel, set up by RBI Governor Raghuram Rajan, managing inflation would be made the primary policy goal of the RBI, ahead of growth and financial stability.
While some of the recommendations announced Tuesday would need legislative approval, most could be implemented by the central bank.
Rajan, a high-profile former chief economist at the International Monetary Fund who took office on September 4 in the midst of a currency crisis, has in the past spoken in favour of setting monetary policy by committee and establishing an inflation target using the CPI.
Ready or not?
The government of Prime Minister Manmohan Singh has struggled to implement reforms or remove bureaucratic hurdles that would attract investment to ease the country's inherent inflation pressures.
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A 2012 decision to allow entry to foreign supermarkets, intended to reduce widespread wastage due to a lack of facilities such as refrigeration, has generated little interest because of stiff local sourcing requirements. The UK's Tesco recently became the first such chain to invest, albeit with a relatively modest $110 million commitment.
Singh's government has been paralyzed by corruption scandals that have stifled reform efforts. It faces an election by May, the outcome of which is uncertain.
"The question is whether there is political support for bringing down inflation. If the new government undertakes reforms to reduce subsidies and bring down food inflation, the headline CPI inflation can come down fast," said A. Prasanna, economist at ICICI Securities Primary Dealership.
The RBI's current mixed mandate of managing inflation, economic growth and financial stability all in one gives it flexibility but has also led to often-shifting priorities. Critics say that has stifled growth - Asia's third-largest economy is expanding at its slowest pace in a decade - without bringing inflation under control.
"It's a big positive for India's macro policy framework if they can get this implemented, because it will basically help I think better anchor monetary policy by establishing a clear objective," said HSBC economist Leif Eskesen, echoing the sentiments of many economists.
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The challenge is fitting rigid inflation management into an often-messy political reality.
Rajan's predecessor at the RBI, Duvvuri Subbarao, repeatedly called on New Delhi to implement reforms to ease investment rules, clear infrastructure bottlenecks and cut government subsidies, but with little success.
The new policy set-up would raise the stakes for the government to act - a tall order, especially if another fragmented coalition emerges from the upcoming elections.
Indian governments have tended towards promoting growth and putting pressure on the central bank to keep monetary policy loose. The Mumbai-based RBI is not technically independent - the governor and his deputies are appointed by the government - although it generally enjoys latitude in policy making.
Setting a CPI target of 4 percent over the long-term would remove some of the discretion in policy making and at the same time strengthen the central bank's independence by insulating it from pressures from New Delhi.