Consider the following statements about inflation trends in India during 2017–18: (1) Inflation in India continued to be moderate during 2017–18. (2) There was a significant reduction in food inflation, particularly for pulses and vegetables, during this period. Which of the statements given above is or are correct?

Introduction / Context:
Macroeconomic stability is often assessed by looking at inflation trends, especially in emerging economies like India. During 2017–18, policymakers and analysts paid close attention to overall inflation as well as to food inflation, because food prices directly affect the cost of living for a large share of the population. The question presents two statements about inflation trends in that specific year and asks which of them are correct according to officially reported data and economic surveys. Understanding this helps candidates link theory with real world macroeconomic outcomes.

Given Data / Assumptions:

• Statement 1: Inflation in India continued to be moderate during 2017–18.
• Statement 2: There was a significant reduction in food inflation, especially in pulses and vegetables, during 2017–18.
• The context is consumer price based inflation, which is used widely for policy analysis.
• We rely on standard macroeconomic reports, such as the Economic Survey and central bank reviews, for interpreting these statements.

Concept / Approach:
To judge whether each statement is correct, we need to recall the broad inflation scenario in India during 2017–18. A period is described as having moderate inflation when average inflation is neither extremely high nor in deflationary territory, but stays within a relatively comfortable range. Food inflation is a major driver of headline inflation in India, and specific commodities like pulses and vegetables can show high year to year variation. Government data for that year showed relatively subdued headline inflation compared to previous periods, and a marked easing in food inflation due to good harvests and policy measures. Therefore, we must evaluate each statement individually and then combine the results.

Step-by-Step Solution:
Step 1: Consider Statement 1. Data for 2017–18 show that inflation remained within a moderate range, helped by careful monetary policy and favourable supply conditions in several sectors.Step 2: Since inflation neither spiked to very high levels nor fell sharply into deflation, describing it as moderate is consistent with official assessments.Step 3: Now consider Statement 2. Food inflation, particularly for pulses and vegetables, eased significantly in 2017–18 due to good crop production, better supply management, and sometimes lower global prices.Step 4: Economic commentaries for that year frequently highlight sharp corrections in prices of pulses and some vegetables after earlier periods of high inflation.Step 5: Therefore, both Statement 1 and Statement 2 correctly reflect the broad inflation trends in India during 2017–18.Step 6: When both statements are individually correct, the combined answer is that both 1 and 2 are correct.

Verification / Alternative check:
A good way to verify conceptual questions about macroeconomic trends is to recall key policy messages from the Economic Survey and central bank reports. For 2017–18, policymakers often emphasised that inflation had remained under control and within an acceptable band for most of the year. They also mentioned that headline inflation was kept lower by a fall in food prices, with pulses and vegetables playing a major role in the disinflation process. These official narratives support both statements in the question. Hence it is consistent to mark both as correct.

Why Other Options Are Wrong:
Option A (1 only) is wrong because it ignores the documented decline in food inflation for pulses and vegetables, which supports Statement 2. Option B (2 only) is incorrect because it would imply that overall inflation was not moderate, which contradicts the macroeconomic evidence. Option D (Neither 1 nor 2) is clearly wrong because both statements are consistent with the economic record. Only Option C, stating that both 1 and 2 are correct, fits the actual situation during 2017–18.

Common Pitfalls:
Candidates sometimes memorise isolated facts about inflation without linking them to specific years or policy periods, leading to confusion when questions refer to a particular time frame. Another pitfall is mixing up wholesale price trends with consumer price trends. Some students also assume that any mention of inflation must refer to a crisis, overlooking periods of moderate, well managed inflation. To avoid such errors, it is helpful to connect data with major policy documents and to understand whether a given year was generally seen as stable or volatile in terms of prices.

Final Answer:
Both statements correctly describe inflation trends in India during 2017–18, so the right answer is Both 1 and 2.