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Q67 (IAS/1997) Economy › Money, Banking & Inflation › Inflation measurement Answer Verified

In India, inflation is measured by the

Result
Your answer: —  Â·  Correct: A
Explanation

India has traditionally used the Wholesale Price Index (WPI) as the headline measure of inflation. The WPI tracks price changes at the wholesale or factory-gate/mandi level and is published monthly by the Office of the Economic Adviser, DPIIT, making it the conventional gauge for overall price movement in the economy [1]. While various Consumer Price Indices (CPIs) exist (for industrial workers, agricultural labourers, urban non-manual employees, etc.), these are sectional retail measures reflecting cost-of-living for specific groups rather than a single aggregate CPI for the country [3]. The GDP deflator is an economy-wide implicit price measure but is not the primary operational inflation indicator historically used in India.

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 2. Wholesale Price Index (WPI): > p. 32
  2. [2] https://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/IAEDF140110.pdf
  3. [3] https://www.indiabudget.gov.in/budget_archive/es2008-09/chapt2009/chap41.pdf
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