Chapter 7: STATISTICAL CONCEPTS

Inflation

Inflation is ratio of price rise in current year to price rise in base year.

Inflation indices:

1. Wholesale price index – calculated by economic advisor, ministry of commerce [base year – 2011-2012]
2. Consumer price index – calculated by CSO [base year – 2012]
3. Index of industrial production – CSO [base yr – 2004]
4. GDP – CSO [base year – 2011]

Index of industrial production

It has 682 items which are grouped into three categories like Manufacturing, Mining and Electricity. Total weight of three is 1000.

Manufacturing [755] + mining [141] + electricity [103] = 1000

There are 8 core sectors of I.I.P which have 38% weight [coal, fertilizer, electricity, crude oil, natural gas, steel, cement, refinery products]. Electricity is highest weight and fertilizer is lowest weight. I.I.P is released monthly.

Maximum data of items comes from D.I.P.P, followed by Indian bureau of mines remaining items are from ministries, commodity boards and government dept.

I.I.P data is also presented goods category wise and their weights:

1. Basic goods - 456
2. Consumer non durables - 213

3. Intermediate goods - 156
4. Capital goods - 88
5. Consumer non durables – 84
6. Total - 1000

Wholesale price index:

There are three categories of articles in W.P.I: manufactured products = 65, primary articles = 20 and fuel and power = 15. Total weight is 100. It is released weekly and monthly. Total = 676 items. Data is collected from leading manufacturing units, P.S.Us, government departments and state governments.

Core inflation means inflation of non – food and non fuel part.

Consumer price index:

C.P.I has 6 sectors and three types of C.P.I: rural, urban and consolidated. The sectors and weights are given below. C.P.I covers service sector too which is not a part of W.P.I or I.I.P.

Rural C.P.I has no housing component. C.P.I is released monthly. C.P.I urban is calculated after data from N.S.S.O and rural is from data collected by N.S.S.O + post office.

Annual survey of industries:

It is conducted by C.S.O and covers all registered units under Factories Act. Also includes electricity companies, movie companies. Services are excluded. 2.17 lakh units covered. It provides information to understand the growth, composition of organized manufacturing sector.

Q.With reference to Union Budget, which of the following, is/are covered under Non-Plan Expenditure?
Defense -expenditure
Interest payments
Salaries and pensions
Subsidies
Select the correct answer using the code given below. (UPSC CSAT 2014)

• 1 only

• 2 and 3 only

• 1, 2, 3 and 4

• None

Ans . C

1. Defence capital expenditure comes under plan expenditure but subsidies, salaries, pensions and interest payments are under non plan expenditure.

Q. The sales tax you pay while purchasing a toothpaste is a(UPSC CSAT 2014)

• tax imposed by the Central Government.

• tax imposed by the Central Government but collected by the State Government

• tax imposed by the State Government but collected by the Central Government

• tax imposed and collected by the State Government

Ans . D

1. Sales tax is an indirect tax levied and collected by the State.

Q.With reference to India economy, consider the following :
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/components of Monetary Policy? (UPSC CSAT 2015)

• 1 only

• 2, 3 and 4

• 1 and 2

• 1, 3 and 4

Ans . C

1. Public debt and Public revenue are matters falling under Fiscal policy. The Ministry of Finance handles these subjects.

2. Bank rate and OMOs fall within the jurisdiction of RBI’s monetary policy.

Q.Which reference to inflation in India, which of the following statements is correct? (UPSC CSAT 2015)

• Controlling the inflation in India is the responsibility of the Government of India only

• The Reserve Bank of India has no role in controlling the inflation

• Decreased money circulation helps in controlling the inflation

• Increased money circulation helps in controlling the inflation

Ans . C

1. Decreased money circulation leads to lesser money in hands of people to spend. Hence, lower demand (given the same supply) leads to falling prices fall and reduced inflation.

Q.Pradhan Mantri Jan Dhan Yojana has been launched for (UPSC CSAT 2015)

• providing housing loan to poor people at cheaper interest rates

• Promoting women’s Self Help Groups in backward areas

• promoting financial inclusion in the country

• providing financial help to marginalised communities

Ans . C

Q.The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to (UPSC CSAT 2014)

• banking operations

• communication networking

• military strategies

• supply and demand of agricultural products

Ans . A

1. MSF rate is a short term lending rate by RBI to banks at a higher interest rate than repo rate.

2. Net Demand and Time Liabilities are total value of time and demand deposits held in banks by the public.

Q.What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?
It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
It enables the beneficiaries in the rural areas to make deposits and withdrawals.
Select the correct answer using the code given below. (UPSC CSAT 2014)

• 1 only

• 2 only

• Both 1 and 2

• Neither 1 nor 2

Ans . C

1. Besides giving access to banking, it also enables government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries, enabling them to draw the money from the bank saathi or business correspondents in their village itself.

Q.In the context of Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
To enable the Central Bank to control the amount of advances the banks can create
To make the people’s deposits with banks safe and liquid
To prevent the commercial banks from making excessive profits
To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below. (UPSC CSAT 2014)

• 1 only

• 1 and 2 only

• 2 and 3 only

• 1, 2, 3 and 4

Ans . B

1. Reserve requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit