UPSC Prelims 1997 · General Studies

Question 67: Economy and Social Development

In India, inflation is measured by the

aWholesale Price Index Number

bConsumers Price Index for urban non-manual workers

cConsumers Price Index for agricultural workers

dNational Income deflation

AnswerThe answer is (a).

In 1997 India measured inflation by the Wholesale Price Index, whose point-to-point change was the standard measure of inflation in policy and in official statements. The Consumer Price Indices for industrial and agricultural workers existed, but they were used for wage adjustment and not for the headline rate. Remember the WPI as the 1990s headline measure.

Why each option is right or wrong

(a) Right: the Wholesale Price Index was the headline measure.
(b) The CPI for urban non-manual workers was used for pay adjustment, not as the headline measure.
(c) The CPI for agricultural workers was used for wage adjustment, not as the headline measure.
(d) The national income deflator measures price change in GDP, but it was not the inflation figure used.

Worth knowing: Since 2016 the RBI's inflation target has been set on the Consumer Price Index; the WPI is still published but is no longer the headline measure.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 1997, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.