Inflationary Trends in India: A Pre and Post Reform Study

The present paper attempts to explore the nature, trends and patterns of inflation in India during 1980-2016. The selected time period has been trifurcated purposively into three-time spans namely, pre-reform period (1980-90), after reform period (1991-2000) and subsequent period (2001-16). The endeavour of the paper is to examine the dynamics of inflation over the three-time spans from 1980-2016 in the Indian economy. It has been found that the inflation, based on WPI and CPI, is continuously rising since 1980. Up to 1995, the trend in CPI and WPI were same and there was no significant difference between them. However, after 1995, CPI has recorded larger growth as compared to WPI. Such trend has also continued in the subsequent period. The study reveals that this trend may be attributed to change in the composition of WPI and CPI since weights of primary articles have declined in WPI whereas such weights have registered a considerable increase in the categories of manufacturing, fuel and power. The shift in weights overtime provides us with an indicator of the changing production and use pattern of the commodities in the Indian set up. Further, the weights of food items have reduced overtime in case of CPI and such weights have been increased in respect of clothing, housing and fuel. The changes witnessed in weights of CPI are indicators of a growing economy. This study further contributes in the available literature by comparing the patterns of Inflation in Pre and Post-reform Period.