We are receiving inflation in a numeric value. Can you
explain how the number is arrived??
And CRR is the ratio of the money the Bank/institution has
to keep the money with the RBI. Is there any interest being
paid by RBI to the Bank for the cash reserve fund with the
RBI?
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Answer Posted / himanshu
Inflation is calculated on the basis of whole sale price
index. Example-
Say there are six commodities which are traded in a country
whose price are Rs5,10,15,20
the avg price would be 5+10+20+15/4 = 12.5
now the avg price in the next yr raises to 13.5
the rate of inflation would be=1/12.5 *100= 8%
CRR is the ammount which commercial banks have to park wid
RBI and RBI pays interest on it.
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