Refer to the article "WPI inflation soars to 14.6% on supply chain disruptions" and answer the following questions:

1. As per the article what reasons have led to the rise in the WPI based inflation?

2. A rise in nominal GDP means that the economy is growing. Is this statement always true? Give reasons to support your answer.

3. As the RBI governor what will be your suggestion to counter this situation and what may be the fallout on the economic growth?

4. Due to the recent recessionary situation the Government had to sustain high fiscal deficit. Already burdened with high debt the government decides to mitigate the situation through the non-debt measures.

What avenues do you think the government has and how it may affect the economy?

WPI inflation soars to 14.6% on supply chain disruptions Hits 4-Mth High In March | In Double Digits For 12 Mths In Row Tours News NETWORK GROWING CONCERN FOR POLICYMAKERS The sharp increase in crude oil prices was one of the key New Delhi: Wholesale price Retail Inflation () contributors to the inflation inflation soared to a four 15- 14.6 month high in March due to - WPI-based Inflation (%) numbers in March. 13.1 Wheat prices rose an an the sharp increase in prices nual 14%. fuel & power shot of crude petroleum and na: tural gas, mineral oils and 10.7 up 345%, and manufactured products jumped 10.7%. Pota basic metals. The surge was to prices rose 340%, vegetab a result of the disruption in le prices soared nearly 20%% in global supply chains, trigge March. Core inflation (minus red by the ongoing Russia food and fuel) shot up to 10.9%% Ukraine conflict. during the month, posing a Dain released by the de- fresh worry over the trajecto partment for promotion of Jay Feb Mar Apr May Jun Ad Aug Sep Oct Nov Dee Jon Fob Bar ry of the price increase. industry and internal trade The RBI had recently (DPIIT) on Monday showed WPI PRESSURE POINTS held interest rates steady but Inflation, based on the who raised inflation forecast to lesale price index (WPD, Fuel & Power Non-food articles 5.7% for 2032-21, citing the in. Jumped to 146% in March, higher than the 1.IS in Fe- Potato 124.6 create in commodity prices oil foods and disruption in supply bruary and 7.9% in March 172-5 2021. WPI inflation has been Vegetables 10.0 chains. It also cut GDP In double digits for 12 months Vegetable & animal oily and fats 16.1 Source: Goul growth forecast to 7.2% for 2023-34 from the earlier 7.8%. in a row, the first time ever TIMES VIEW: Inflation has reached worrying levels. It is a well Globally Inflation has soa highlighting the entrenched acknowledged economic truth that price rise disproportionately red and posted record highs price pressures. Stubborn hurts the poor. The government and the RBI must take a hard look due to the war in Ukraine inflation has hurt household at its causes and address it on a priority basis. and prompted central banks budgets & the poor and has to tighten interest rates. "We dampened consumption, 17-month highof nearly 7% in a fresh challenge for policy soo a growing probability of which is critical for growth. March led by a sharp increase makers against the backdrop the first repo hike being pre- The WPI data comes close in prices of food items and of Russia's invasion of Ukrai- ponod to June 2022," said on the heels of retail inflation hardening of price pressures ne and the prospect of an in- Aditi Nayar, chief economist numbers, which Jumped to a in other key segments, posing crease in interest rates soon. at ratings agency ICRA