CEA SUGGESTS EXCLUDING FOOD PRICES FROM INFLATION TARGET
Why in the news?
India’s inflation is expected to align with the 4% target by 2025-26.
Chief Economic Adviser (CEA) V. Anantha Nageshwaran suggests an inflation targeting framework that excludes volatile food prices.
source:bussinessstandard
About Chief Economic Adviser (CEA):
The CEA is a Secretary-equivalent post in the Government of India.
Heads the Economic Division, Department of Economic Affairs, Ministry of Finance.
Ex-officio cadre controller of the Indian Economic Service.
Reports directly to the Minister of Finance.
What is Inflation?
Defined by the IMF as the rate of price increase over time.
Reflects rising living costs and indicates price increases for goods/services.
Significant impact in India due to economic disparities and large population.
Measuring Inflation in India:
Consumer Price Index (CPI): Measures retail price changes for a basket of goods and services; base year 2012.
Variants: CPI-IW, CPI-AL, CPI-RL, CPI-UNME
Used by Monetary Policy Committee (MPC)
Wholesale Price Index (WPI): Tracks price changes at the wholesale level; includes primary articles, fuel, power, and manufactured products; base year 2011-12.
Producer Price Index for Manufacturing (PPIM): Measures price changes for domestic manufacturing output.
What is a Price Index ?
A Price Index measures average price changes over time for goods and services.
It is referenced to a base year, set as 100.
Formula: (Current Year’s Price / Base Year’s Price) x 100.
India's No.1 PU & Degree With Integrated IAS & IPS(UPSC/PSC) Training College.
source:bussinessstandard
