The consumer price index-based inflation rose to 5.11 percent in January from 4.28 percent last December.

Moreover, Jaitley has extended the target deadline for controlling  fiscal deficit to three percent, reasoning that insistence on a  timetable to contain the deficit would harm growth prospects.

In his budget, the finance minister announced the government would sign the Monetary Policy Framework Agreement with the RBI for controlling inflation, which will become a law providing for a  monetary policy committee.

The agreement is to "primarily maintain price stability while keeping in mind the objective of growth". It says the RBI will aim to bring retail inflation below six percent by January 2016 and to around four percent by fiscal 2016-17.

The government has also proposed to amend the RBI Act to take away money market regulatory powers from the central bank and bring it under the purview of market regulator the Securities and Exchange Board of India.

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