Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
4. Examine the factors for the high rate of inflation in the Indian economy in the recent months. Suggest measures to keep the inflation within the Reserve Bank of India (RBI)’s tolerance band. (250 words)
Difficulty level: Moderate
Reference: The Hindu
Why the question:
Inflation for the last four months has been worryingly high — wholesale price index (WPI) has been above 10% and consumer price index (CPI) crossed the 6% mark in June, which was above the Reserve Bank of India (RBI)’s tolerance band.
Key Demand of the question:
To write about the reasons for high rate of inflation and suggest measures to keep it under control.
Directive word:
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Introduction:
Begin defining inflation and giving the recent rates of high rates of inflation.
Body:
In the first part, in detail explain the reasons for the recent high rate of inflation – increased taxation of energy, disrupted supplies, sharp rise in the profits of the corporate sector, international factors and weakening of the rupee. Write about the impact of rise of inflation on the marco-economic situation of India.
Suggest measures to bring inflation under control to keep it under acceptable limits.
Conclusion:
Conclude with a way forward
