Question

According to the Economic Survey 2025-26, which correctly describes the state-level inflation situation?

Q: Answer-According to the Economic Survey 2025-26, which correctly describes the state-level inflation situat...

RBIs inflation targeting Target 4, Tolerance Band 2 to 6. Breaching the lower bound CPI lt 2 signals deflationary risk. The Economic Survey 2025-26 highlighted significant sub-national inflation variation. Select states particularly those with high weightage in vegetables and perishables recorded CPI inflation below 2 during periods of sharp food price correction. Key conceptual points National headline CPI may mask significant sub-national divergences. States below 2 face deflationary pressures that suppress demand and investment. RBIs single national target cannot fully address state-level divergences.

A Rajasthan, Uttar Pradesh, and Bihar breached the lower tolerance level of inflation

B Kerala, Karnataka, and Tamil Nadu breached the lower tolerance level due to lower agricultural dependency

C Certain states recorded CPI inflation below the 2% lower bound of RBI’s inflation tolerance band (4% ± 2%), primarily driven by sharp falls in vegetable and food prices in those states

D No state breached the lower tolerance level — all remained within the 2%–6% band throughout

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