Temporary respite(The Hindu, GS-3, Economy)

Temporary respite(The Hindu, GS-3, Economy)


Context:-According to a recent estimate of NSO, the head line inflation is three month low i.e.4.29% provides some relief to the government as well as people.

What is inflation:- It is the general rise in price level of goods and services in the economy in a specific period. Little inflation is good for the economy as it provides more jobs and there by consumption. But too much inflation hurts the economy such as hyper inflation, galloping inflation etc.

How do we measure the inflation:-

  • compilation of Consumer price index, whole sale price index, index of industrial production are some of the index which provides over view of prices. But indian government and reserve bank of india measure the inflation in the economy by the CPI (ALL)
  • According to the RBI act there is 6 member monetary policy committee which hits the inflation target of between 2-6%.

What were the reasons of high inflation in india in the recent past?

  • Due to COVID-19, there was a lockdown in the economy which lead to squeezing of production.
  • Consumption, though decreases but the food and other essential items remains same, but production dented.
  • Loss of jobs and increase in unemployment.
  • A recession in the economy.
  • A downward trajectory of the world economy.
  • India’s economy has some inherited issues such as labor law issues etc.
  • Read about Philip curve, read about the indexes for UPSC prelims.


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