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A novel approach based on information granulation using Rough sets for impulse fault identification of transformers has been proposed. It is found that the location and type of fault within a transformer winding can be classified efficiently by the features extracted from cross-wavelet spectra of current waveforms, obtained from impulse test. Results show that the proposed methodology can localize the fault within 5% of the winding length with a high degree of accuracy. The basic concepts of feature extraction using cross-wavelet transform and the method of classification of those features by rough-granular method are also explained.