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To revise and strengthen the monetary policy framework in India, RBI choses to target retail inflation because
  1. Wholesale inflation does not generally reflect price movements in all wholesale markets.
  2. Wholesale inflation does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India.
  3. Wholesale Price Index (WPI) often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.
Select the correct answer code:
  • a)
    1, 2 
  • b)
    1, 3 
  • c)
    2, 3 
  • d)
    1, 2, 3
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
To revise and strengthen the monetary policy framework in India, RBI c...
  • In January 2014, an expert committee of the RBI submitted its report on the ways to revise and strengthen the monetary policy framework in India, it chose to target retail inflation.
  • Here’s why.
  • Firstly, the committee pointed out that wholesale inflation “does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India”.
  • Secondly, it pointed out that wholesale inflation “does not generally reflect price movements in all wholesale markets”. This happens because price quotations for some important commodities such as milk, LPG etc. are taken from retail markets.
  • Thirdly, movements in WPI often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.
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To revise and strengthen the monetary policy framework in India, RBI choses to target retail inflation because Wholesale inflation does not generally reflect price movements in all wholesale markets. Wholesale inflation does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India. Wholesale Price Index (WPI) often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.Select the correct answer code:a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer?
Question Description
To revise and strengthen the monetary policy framework in India, RBI choses to target retail inflation because Wholesale inflation does not generally reflect price movements in all wholesale markets. Wholesale inflation does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India. Wholesale Price Index (WPI) often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.Select the correct answer code:a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about To revise and strengthen the monetary policy framework in India, RBI choses to target retail inflation because Wholesale inflation does not generally reflect price movements in all wholesale markets. Wholesale inflation does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India. Wholesale Price Index (WPI) often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.Select the correct answer code:a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for To revise and strengthen the monetary policy framework in India, RBI choses to target retail inflation because Wholesale inflation does not generally reflect price movements in all wholesale markets. Wholesale inflation does not capture price movements in non-commodity producing sectors like services, which constitute close to two-thirds of economic activity in India. Wholesale Price Index (WPI) often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.Select the correct answer code:a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'D'. Can you explain this answer?.
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