Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
5. Explain the differences between Wholesale Price Index (WPI) and Consumer Price Index (CPI), and suggest strategies that can be adopted to manage core inflation within the economy. (250 words)
Difficulty level: Moderate
Reference: The Hindu , Insights on India
Why the question:
The reading for retail inflation braked sharply last month to an 18-month low of 4.7%, aided in no small measure by the fact that price gains had hit an eight-year high of 7.8% in April 2022.
Key Demand of the question:
To write about the differences between WPI and CPI and measures that are needed to contain core inflation.
Directive word:
Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the context. You must be defining key terms wherever appropriate and substantiate with relevant associated facts.
Structure of the answer:
Introduction:
Begin by defining inflation.
Body:
First, write about WPI and CPI are two commonly used terms to determine inflation in the country and in detailed write how they are different from each other.
Next, write about the core inflation and how it is impacting the economy. Suggest measure that are required to contain core inflation in the economy.
Conclusion:
Conclude by writing a way forward.
