Price Policy in India.

Price movements are recorded by two sets of index numbers in India. These are WPI and CPI.

WPI - Wholesale Price Index.

    -It is the main measure of price level changes. It is a central measure of Inflation.

·         -It doesn’t include nontrade-able goods and also excludes services.

·         -It focuses on price of goods traded between corporations.

·         -It traces the wholesale prices as it name suggests.

·         -The purpose of WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction.

·         -The base year for the current WPI is 2004-05.

 CPI – Consumer Price Index.

     -It is based on retail prices as the consumers have to actually pay.

·         -It is the measure of the average change over time in the prices paid by the consumers

·         -Since consumption is different for different for groups of people (like urban,  Rural, agricultural and industrial, etc ) so different CPI indices are computed.

·         -It focuses on price of goods bought by consumers.

·         -It traces the retail prices.

Causes of rising price in India:-

Demand-pull factors:-

• Massive increase in Government expenditure.
• Increase in money supply.
• Growth of black money.
• Sizeable increase in population.

Cost-push factors:-

• Slow growth of agriculture and industry.
• Increase in production crises.
• Increases in cess duties.
• Hike in petroleum prices.
• Changes in the minimum support prices (MSP).