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NDA 2023 GAT · General Knowledge · Indian Economy · medium

Which price index is used as the main measure of inflation for India's monetary policy framework?

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Which price index is used as the main measure of inflation for India's monetary policy framework?
  1. A. Consumer Price Index (CPI)
  2. B. Wholesale Price Index
  3. C. Index of Industrial Production
  4. D. Sensex
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Answer: (A) Consumer Price Index (CPI)

Since the 2016 amendment to the RBI Act, India follows flexible inflation targeting with a 4 per cent target and a tolerance band of plus or minus 2 per cent, based on CPI combined. The WPI measures wholesale prices, the IIP measures industrial output, and the Sensex is a stock-market index.
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Original question written in the NDA 2023 GAT pattern and checked twice for the correct answer. Not an official question paper. How we write and check questions · Corrections policy · Report a mistake