Terms and Definitions

What is debt write off? 
For example, you made a sale on credit to a customer, but two weeks later the client’s business declared bankruptcy and became completely unable to pay off the credit account with you. This uncollectible debt would then be written-off by your company and recorded as an expense by accountants.
When a nonperforming loan is written off, the lender receives a tax deduction from the loan value.
Not only do banks get a deduction, but they are still allowed to pursue the debts and generate revenue from them. Another common option is for banks to sell off bad debts to third-party collection agencies.
What is core inflation?
  • Core inflation is a measure of inflation that excludes certain items that face volatile price movements.
  • Core inflation eliminates products that can have temporary price shocks like food, oil etc. because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.
  • A dynamic consumption basket is considered the basis to obtain core inflation. Some goods and commodities have extremely volatile price movements.
  • Core inflation is calculated using the Consumer Price Index (CPI) by excluding such commodities.
  • If temporary price shocks are taken into account, they may affect the estimated overall inflation numbers in such a way that they are different from actual inflation.
  • To eliminate this possibility, core inflation is calculated to gauge the actual inflation apart from temporary shocks and volatility.
What is WPI?
  • The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods.
  • It is used to measure Inflation.
  • Some countries ( like the Philippines) use WPI changes as a central measure of inflation.
  • But now India has adopted new CPI to measure inflation.

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