Question
According to the Economic Survey 2025-26, which
correctly describes the state-level inflation situation?Solution
RBI’s inflation targeting: Target = 4%, Tolerance Band = 2% to 6%. Breaching the lower bound (CPI < 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. • RBI’s single national target cannot fully address state-level divergences.
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