โก Topic 06 of 6 ยท Chapter 05 ยท Quick Revision
Inflation, Deflation & Quick Revision
Types of inflation, WPI vs CPI, causes of inflation, RBI’s inflation targeting, and complete chapter revision.
๐ Types of Inflation
| Type | Definition | Example |
|---|---|---|
| Demand-Pull Inflation | Too much money chasing too few goods โ demand exceeds supply | Post-COVID stimulus led to demand-pull inflation globally |
| Cost-Push Inflation | Rising production costs push up prices โ supply-side shock | Rising oil prices โ higher transport costs โ higher prices of all goods |
| Structural Inflation | Due to structural bottlenecks in the economy | Poor agricultural infrastructure โ food price inflation in India |
| Imported Inflation | Rising prices of imported goods | Rising crude oil prices โ higher petrol prices in India |
| Hyperinflation | Extremely high inflation (50%+ per month) | Zimbabwe (2008): 89.7 sextillion % inflation |
| Stagflation | High inflation + high unemployment + slow growth | India in 1970s; USA in 1970s |
๐ WPI vs CPI
| Feature | WPI | CPI |
|---|---|---|
| Full Form | Wholesale Price Index | Consumer Price Index |
| Measures | Wholesale prices at producer level | Retail prices paid by consumers |
| Base Year | 2011-12 | 2012 |
| Released by | DPIIT (Ministry of Commerce) | NSO (Ministry of Statistics) |
| Used for | GDP deflator, industrial pricing | RBI’s inflation targeting |
| Includes services? | No | Yes |
โญ RBI uses CPI for inflation targeting (not WPI). Target: 4% (ยฑ2%). WPI is used for GDP deflator and industrial pricing.
โ Complete Chapter 05 Revision Checklist
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RBI established: April 1, 1935; nationalised January 1, 1949
โ RBI headquarters: Mumbai; First Indian Governor: C.D. Deshmukh
โ RBI issues all currency except โน1 note (Ministry of Finance)
โ MPC: 6 members; decides repo rate; established 2016
โ CRR = cash with RBI (no interest); SLR = liquid assets (interest earned)
โ Repo Rate = RBI lends to banks; Reverse Repo = RBI borrows from banks
โ RBI inflation target: 4% (ยฑ2%) CPI; flexible inflation targeting since 2016
โ First bank nationalisation: July 19, 1969 (14 banks)
โ Second bank nationalisation: April 15, 1980 (6 banks)
โ Payment Banks: deposits up to โน2 lakh; cannot give loans
โ PSL target: 40% of ANBC for domestic banks; 75% for RRBs/SFBs
โ NPA = loan unpaid for 90+ days
โ IBC 2016: 180-day resolution; handled by NCLT
โ PMJDY launched: August 28, 2014; 50+ crore accounts
โ JAM Trinity = Jan Dhan + Aadhaar + Mobile
โ UPI launched 2016 by NPCI; India = 46% of global real-time payments
โ RTGS: min โน2 lakh; NEFT: no minimum; IMPS: instant 24×7
โ RBI headquarters: Mumbai; First Indian Governor: C.D. Deshmukh
โ RBI issues all currency except โน1 note (Ministry of Finance)
โ MPC: 6 members; decides repo rate; established 2016
โ CRR = cash with RBI (no interest); SLR = liquid assets (interest earned)
โ Repo Rate = RBI lends to banks; Reverse Repo = RBI borrows from banks
โ RBI inflation target: 4% (ยฑ2%) CPI; flexible inflation targeting since 2016
โ First bank nationalisation: July 19, 1969 (14 banks)
โ Second bank nationalisation: April 15, 1980 (6 banks)
โ Payment Banks: deposits up to โน2 lakh; cannot give loans
โ PSL target: 40% of ANBC for domestic banks; 75% for RRBs/SFBs
โ NPA = loan unpaid for 90+ days
โ IBC 2016: 180-day resolution; handled by NCLT
โ PMJDY launched: August 28, 2014; 50+ crore accounts
โ JAM Trinity = Jan Dhan + Aadhaar + Mobile
โ UPI launched 2016 by NPCI; India = 46% of global real-time payments
โ RTGS: min โน2 lakh; NEFT: no minimum; IMPS: instant 24×7