The Reserve Bank of India (RBI) is responsible for formulating and implementing the monetary policy of India. The process of formulating this policy consists of the following steps:

• Analysis of Economic Data: The RBI monitors various economic indicators like inflation, growth, and employment to analyze the current state of the economy.
• Consultation with the Government: The RBI consults with the government to understand its economic policies and goals. The government also provides data and insights to the RBI for decision-making.
• Review of Global Economic Trends: The RBI monitors the global economy and its impact on India's economy in order to make informed policy decisions.
• Setting Targets: Based on the analysis of economic data, consultations with the government, and global economic trends, the RBI sets targets for key monetary policy variables like inflation, growth, and interest rates.
• Implementation: The RBI implements monetary policy by using tools like setting interest rates, reserve requirements, and open market operations.
• Monitoring and Review: The RBI continually monitors the economy to assess the impact of its monetary policy decisions. It also reviews and adjusts policy as needed to achieve its targets.

Several factors influence policy decisions, including the state of the economy, government policies, global economic trends, and inflationary pressures. The RBI is committed to maintaining price stability and promoting economic growth while ensuring the stability of the financial system.