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Improvement of diagnostic methods for both power and Instrument transformer is crucial considering the part they play in electrical networks as well as their cost. Frequency response analysis based testing of transformers is one of the methods that have been introduced recently. This method enables the identification of winding deformations resulting from the short circuit currents and winding dislocations occurring during transportation, and can also be used to assess the state of electrical insulation. The damage may cause a change in the physical condition of transformer which would be reflected in the electrical parameters- resistance, inductance and capacitance. The insulation performance is influenced by thermal, electrical and mechanical stresses. The displacement of windings can occur during transportation of transformers or during a short circuit near the transformer in the power system. The Frequency Response Analysis (FRA) can detect the type of fault and the exact location of fault. FRA essentially consists of measuring the impedance of transformer windings over a wide range of frequencies and comparing the results with a reference set. There are two ways of injecting the wide range of frequencies necessary, either by injecting an impulse into the winding or by making a frequency sweep using a sinusoidal signal. The former method is known as the impulse response method and the latter is known as the swept frequency method. The result obtained for the various fault condition is compared with the reference set and the conclusions are drawn.