⚡ Topic 06 of 6 · Chapter 05 · Quick Revision
Inflation, Deflation & Quick Revision
Types of inflation, WPI vs CPI, causes of inflation, RBI’s inflation targeting, and complete chapter revision.
📊 Types of Inflation
| Type | Definition | Example |
|---|---|---|
| Demand-Pull Inflation | Too much money chasing too few goods — demand exceeds supply | Post-COVID stimulus led to demand-pull inflation globally |
| Cost-Push Inflation | Rising production costs push up prices — supply-side shock | Rising oil prices → higher transport costs → higher prices of all goods |
| Structural Inflation | Due to structural bottlenecks in the economy | Poor agricultural infrastructure → food price inflation in India |
| Imported Inflation | Rising prices of imported goods | Rising crude oil prices → 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 |
📊 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 |
⭐ RBI uses CPI for inflation targeting (not WPI). Target: 4% (±2%). WPI is used for GDP deflator and industrial pricing.
✅ Complete Chapter 05 Revision Checklist
✅ RBI established: April 1, 1935; nationalised January 1, 1949
✅ RBI headquarters: Mumbai; First Indian Governor: C.D. Deshmukh
✅ RBI issues all currency except ₹1 note (Ministry of Finance)
✅ MPC: 6 members; decides repo rate; established 2016
✅ CRR = cash with RBI (no interest); SLR = liquid assets (interest earned)
✅ Repo Rate = RBI lends to banks; Reverse Repo = RBI borrows from banks
✅ RBI inflation target: 4% (±2%) CPI; flexible inflation targeting since 2016
✅ First bank nationalisation: July 19, 1969 (14 banks)
✅ Second bank nationalisation: April 15, 1980 (6 banks)
✅ Payment Banks: deposits up to ₹2 lakh; cannot give loans
✅ PSL target: 40% of ANBC for domestic banks; 75% for RRBs/SFBs
✅ NPA = loan unpaid for 90+ days
✅ IBC 2016: 180-day resolution; handled by NCLT
✅ PMJDY launched: August 28, 2014; 50+ crore accounts
✅ JAM Trinity = Jan Dhan + Aadhaar + Mobile
✅ UPI launched 2016 by NPCI; India = 46% of global real-time payments
✅ RTGS: min ₹2 lakh; NEFT: no minimum; IMPS: instant 24×7
✅ RBI headquarters: Mumbai; First Indian Governor: C.D. Deshmukh
✅ RBI issues all currency except ₹1 note (Ministry of Finance)
✅ MPC: 6 members; decides repo rate; established 2016
✅ CRR = cash with RBI (no interest); SLR = liquid assets (interest earned)
✅ Repo Rate = RBI lends to banks; Reverse Repo = RBI borrows from banks
✅ RBI inflation target: 4% (±2%) CPI; flexible inflation targeting since 2016
✅ First bank nationalisation: July 19, 1969 (14 banks)
✅ Second bank nationalisation: April 15, 1980 (6 banks)
✅ Payment Banks: deposits up to ₹2 lakh; cannot give loans
✅ PSL target: 40% of ANBC for domestic banks; 75% for RRBs/SFBs
✅ NPA = loan unpaid for 90+ days
✅ IBC 2016: 180-day resolution; handled by NCLT
✅ PMJDY launched: August 28, 2014; 50+ crore accounts
✅ JAM Trinity = Jan Dhan + Aadhaar + Mobile
✅ UPI launched 2016 by NPCI; India = 46% of global real-time payments
✅ RTGS: min ₹2 lakh; NEFT: no minimum; IMPS: instant 24×7