GAP between WPI and CPI; Government and RBI takes Several Measures to Contain Inflation
06-December-2012 18:59 IST
GAP between WPI and CPI; Government and RBI takes Several Measures to Contain Inflation
Year-on-year inflation in October, 2012 measured in terms of Wholesale
Price Index (WPI) and the Consumer Price Index (CPI) (New series) was
7.45 per cent and 9.75 per cent, respectively. The details of the level
of WPI and CPI (NS) and the rate of inflation are indicated below.
| Table: Comparative weights, base, indices and inflation of WPI and CPI |
|---|
| Composition of Indices | Index | Inflation (%) |
|---|
| Wholesale Price Index (Base: 2004-05=100) |
|---|
| General and group | Weight | Oct. 11 | Oct. 12 | Y-o-Y |
|---|
| Headline WPI | 100.00 | 157.0 | 168.7 | 7.45 |
| Food | 24.31 | 179.8 | 193.7 | 7.73 |
| Non-food | 75.69 | 149.7 | 160.7 | 7.35 |
| Consumer Price Index for new series (base: 2010=100) |
|---|
| CPI-NS General (all India) | 100.00 | 113.8 | 124.9 | 9.75 |
|---|
| Food | 47.58 | 113.7 | 126.7 | 11.45 |
| Non-food | 52.42 | 113.9 | 123.3 | 8.22 |
| Note: the figures are provisional for October 2012 in case of WPI and CPI-NS |
|---|
Variation in the level of index and inflation in these two indices is
due to difference in base year, commodity composition and weights.
Inflation measured in terms of both these indices currently is above the
comfort level of Government and Reserve Bank of India. Government and
Reserve Bank of India have been conscious of the need to contain
inflation. Measures taken in this regard are given at Anenxure-I.
Annexure-I
Measures taken to contain inflation
1. Fiscal and Administrative measures
Reduced import duties to zero-for wheat, onion, pulses, crude palmolein
and to 7.5% for refined and hydrogenated oils and vegetable oils.
Duty-free import of white and raw sugar was extended upto 30/6/2012; presently the import duty has been kept at 10%.
Ban on export of onion was imposed for short period of time whenever
required. Exports of onion were calibrated through the mechanism of
Minimum Export Prices (MEP).
Maintained the Central Issue Price (CIP) for rice (at Rs. 5.65/kg for
BPL and Rs. 3/kg for AAY) and wheat (at Rs. 4.15/kg for BPL and Rs. 2/kg
for AAY) since 2002. Effective prices for BPL families in 2012-13 are
23.4% and 22.8% of the economic cost of rice and wheat respectively.
Suspended futures trading in rice, urad, tur, guar gum and guar seed.
Banned export of edible oils (except coconut oil and forest based oil)
and edible oils in blended consumer packs upto 5 kg with a capacity of
20,000 tonnes per annum and pulses (except Kabuli chana and organic
pulses and lentils upto a maximum of 10,000 tonnes per annum)
Imposed stock limits from time to time in the case of select essential
commodities such as pulses, edible oil, and edible oilseed and in the
case of paddy and rice for specific seven states upto 30.11.2012.
To ensure adequate availability of sugar for the households covered
under TPDS, the levy obligation on sugar factories was resorted to 10%
for sugar season 2011-12.
Government allocated rice and wheat under OMSS scheme.
Off take of wheat and rice continued to be maintained to ensure adequate
availability of food grains. Overall off-take of wheat and rice was
53.0 million tonnes in 2010-11 and 56.4 million tonnes in 2011-12. In
first five months of the current fiscal year 24.0 million tonnes has
already been distributed.
Resumed the scheme for subsidized imported pulses through PDS in a
varied form with the nomenclature “Scheme for Supply of Imported Pulses
at Subsidized rates to States/UTs for Distribution under PDS to BPL card
holders” with a subsidy element of Rs. 20/- per kg to be paid to the
designated importing agencies upto a maximum number of BPL card holders
for the residual part of the current year and extended the scheme for
subsidized imported edible oils w.e.f. 1.10.2012 to 30.9.2013 with
subsidy of Rs. 15/- per kg for import of upto 10 lakh tonnes of edible
oils for this period.
2. Budgetary and other measures
A number of measures have been announced in Unino Budget 2012-13 to
augment supply and improve storage and warehousing facilities.
Government had launched a National Mission for Protein supplements in
2011-12 with allocation of Rs. 300 crore. To broaden the scope of
production of fish to coastal aquaculture, apart from fresh water
aquaculture, the outlay 2012-13 is being stepped up to Rs. 500 crore.
Recently, Government has permitted Foreign Direct Investment (FDI) in
multi-brand retail trading. This will help consumers and farmers by
improving the sell and purchase facilities.
3. Monetary measures
The Reserve Bank of India (RBI) had also taken suitable steps to contain
inflation with 13 consecutive increase by 375 bps in policy rates from
March 2010 to October 2011.
However, to increase liquidity, it reduced CRR (from 6% to 4.25%) and
SLR (from 25% to 23%). With moderation in inflation, repo rate was also
reduced by 50 basis points in April 2012 to bring it to 8.00 per cent.
This was stated by the Minister of State for Finance Shri Namo Narain
Meena in a written reply to a question in the Rajya Sabha today.
PIB
