For historical reasons, India has the unique practice of adopting inflation rate based on wholesale price index (WPI) for policy purposes against the common international practice of following consumer price index (CPI). This is for a variety of reasons: first, the available CPI series are not representative of all classes of people; second, CPI coverage is limited to consumption basket, whereas the coverage of WPI is all inclusive, and third, till recently WPI series were available at high frequency of weekly intervals and with a shorter time lag compared to CPI. Since the most popular CPI is for industrial workers, CPI (IW) is extensively used for wage indexation, while for a variety of other policy purposes, WPI is largely used.

At the end of the calendar year 2011, rebound in the industrial performance and sharp moderation in the annual inflation rate have brought some respite amid the otherwise beleaguered conditions that prevailed on both domestic as well as international fronts throughout this year.

Amidst general macro-economic weakness, with a widening current account deficit, larger fiscal spending could further affect growth and stability in the economy. The recent monetary policy action strikes a balance between risks to growth and inflation.

Global financial markets activity was characterised by revival of hopes sprung by the possible resolution of eurozone crisis coupled with reduced signs of stress due to broadly supportive global economic data released in January second half. In the domestic front, both these global factors influenced the market activities though positive local events like cut in cash reserve ratio (CRR), generally optimistic corporate earnings news and robust dollar inflows during the fortnight rejuvenated overall market confidence.

Early signs of recovery in the US coupled with positive eurozone developments lifted financial market sentiments across the globe. Encouraged by this optimism at the global level, domestic market sentiments also improved notably during the second fortnight of January. The domestic market was also helped by government's concern to propel growth, measures for easing capital inflows as well as reduction in CRR limits beyond expectations. However, lower than expected 7.0%-7.25% domestic GDP growth projection for 2011-12 from 8.4% in 2010-11 remained a negative factor. Due to slackening industrial output and slowdown in global economy the domestic economy also contracted during the current fiscal.

The objective of this study is to identify the period or periods when the domestic economy recorded a structural break in GDP growth, if any, based on both the annual GDP and quarterly data series for two different periods for which such data are available. The exercise uses the relevant econometric tools, which have an array of tests on tracing structural breaks in different economic scenarios. We have surveyed them, and also used them as a tool to the analysis of the quarterly series from 1996-97 (Q1) to 2009-10 (Q2) and the annual series of GDP for as long as 58 years from 1950-51 to 2008-09

There was a significant acceleration in the growth of gross bank credit from 16.7% in 2009-10 to 20.8% in 2010-11. But growth in priority sector credit decelerated sharply from 17.1% to 13.5% during the same period, bringing down its share of total credit from 35.4% to 33.2%. The growth in gross bank credit slowed from 9.2% during April-November 2010 to 5.9% in the same period of 2011; the growth of credit to priority sector declined sharply from 5.2% to 1.2% and credit to agriculture and allied activities worsened from a negative growth of (-) 1.0% to (-) 4.0%.