Economic Survey 2016-17 Analysis for IAS Exam: Inflation

Inflation is a core issue in an economy and it affects directly or indirectly the mass of the country. In India, in order to maintain the desirable money supply in the economy, RBI along with the monetary policy committee (MPC) takes the decision regarding the various policy rates. An IAS aspirant must have such awareness regarding the factors and other parameters which largely affects the general price level of various commodities in an economy.

The Review of Inflation

The Reserve Bank of India in its sixth bi-monthly monetary policy statement kept the repo rate unchanged at 6.25 per cent. Unexpectedly, the monetary policy stance has been shifted from accommodative to neutral due to the objective of achieving 5% inflation by quarter 4 of 2016-17 and the medium-term target of 4% with a band +/- 2% on either side.

The monetary policy committee is citing concerns about the core inflation, while the headline consumer price index (CPI) inflation is moderating. This is why there is a difficult task for the monetary policy committee to analyse the role of headline inflation against core inflation in fixing the policy instance.

Economic Survey 2016-2017 Analysis of GDP

Prices

Economic Survey 2017 Analysis of Fiscal Development

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Food inflation

Current Affairs for IAS Prelims 2017- February 2017

Core inflation remains sticky

Important Questions based on Inflation

Inflation outlook

After analysing the trend of declining the wholesale and retail prices of major food items during the second half of the current financial year 2016-17 so far, the average inflation based on the Consumer Price Index (CPI) is proposed to remain below 5 per cent. For the next financial year 2017-18, the recent slight upward trend in the global commodity prices, particularly in crude oil prices, create an upside risk. The food inflation is expected to remain subdued in the light of higher Rabi sowing acreage, projected increase in the production of pulses and key agro-products globally and incisive food management and price supervising by the Government.

ECONOMIC SURVEY 2016-17 in Detail

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