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> Policies> economic survey 2000-01
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Economic Survey 2000-2001
[Review of Developments]
Inflation
1.60 The year 1999-2000 witnessed a gradual fall in the rate of inflation due to bumper production of foodgrains and an efficient supply-demand management for essential commodities by the Government. The annual average rate of inflation in terms of the Consumer Price Index (CPI) declined sharply from 13.1 per cent in 1998-99 to 3.4 per cent in 1999-2000 despite an increase in fiscal deficit and sharp increase in energy prices. There was also a fall in the annual average rate of inflation in terms of the Wholesale Price Index (WPI) from 5.9 per cent in 1998-99 to 3.3 per cent in 1999-2000.
1.61 The year 2000-01 began with an inflation rate of 6.75 per cent. Over three fourths of this inflation rate may be attributed to the increase in the administered prices of fuel products like liquid petroleum gas (LPG), aviation turbine fuel (ATF) and kerosene in March 2000. But for the increase in the prices of these administered items, inflation would have been close to 4 per cent at the beginning of the current fiscal year. Inflation rate hovered a little over 6 per cent in the first half of the year (April-September), when a further increase in the prices of petroleum products - LPG, kerosene, diesel and petrol - at the end of September, caused the inflation rate to cross the 7 per cent level.
1.62 The annual rate of inflation (provisional) based on the Wholesale Price Index (WPI), for the week ending January 27, 2000 was 8.2 per cent on point to point basis compared with 3.6 per cent on the corresponding date a year ago. The 52 week average inflation rate on the same date was 6.6 per cent compared with 3.4 per cent on the corresponding date of 1999-2000.
1.63 The Wholesale Price Index of all commodities recorded an increase of 4.8 per cent during the first 44 weeks of the current financial year, The wholesale price index for primary articles increased by only 1.4 per cent during this period. The WPI of manufactured products also recorded a modest increase of 3.6 per cent during the first 44 weeks of the current year. Stability in prices of the primary and manufactured products had a sobering effect on the inflation rate, despite the hike in administered prices of energy products.
1.64 Movement in retail prices commonly measured by the Consumer Price Index for Industrial Workers (CPI-IW) remained moderate during the year. CPI (IW) based inflation rate was 5.5 per cent in April 2000 which decelerated continuously thereafter to reach a low of 3.5 per cent in December 2000. This reflects that retail prices of most of the essential commodities of daily use remained stable during the year.
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