​Assertion (A) : The year 2020 saw a very high rate of inflation which went beyond the RBI's inflation upper tolerance limit of 6 percent.
Reason (R) : One of the reasons for the high inflation in 2020 was the Covid induced demand- chain disruptions when the supply chain for essential goods remained unaffected.
Choose the correct answer from the codes below:

Correct option is A

The correct answer is (a) (A) is correct but (R) is wrong.

Explanation:
• In 2020, India experienced high inflation, breaching the RBI’s upper tolerance limit of 6%, mainly due to the COVID-19 pandemic.
• Inflation rose sharply because of supply chain disruptions, particularly for essential goods, not because the supply chain remained unaffected.
• The Consumer Price Index (CPI) inflation averaged above 6% for several months in 2020.
• Thus, Assertion (A) is true, but Reason (R) contradicts the actual cause of inflation.

Information Booster:
• RBI’s inflation target range: 4% ± 2% (i.e., 2%–6%).
• Major contributors to 2020 inflation: disrupted logistics, food price rise, and fuel costs.
• Supply shortages and lockdowns reduced production, pushing up prices.
• RBI’s Monetary Policy Committee (MPC) manages inflation through repo rate adjustments.
• Inflation beyond 6% requires the RBI to explain the reasons to the Government.

Additional Knowledge:
• CPI (Consumer Price Index) measures retail inflation in India.
• WPI (Wholesale Price Index) measures price changes at the wholesale level.
• In 2020, India’s average CPI inflation was around 6.6%.
• The pandemic caused disruptions in agriculture, manufacturing, and transportation sectors.
• RBI kept policy rates accommodative to support economic recovery despite inflationary pressures