What is basic insulation level for transformer & does it affect short circuit capability of a transformer.

Are referring to the insulation around the transformer as a whole or around the wires that make up the coils?

Sounds like a test question from an EE in training.

The actual formal term is Basic Impulse Insulation Level.

Let me google that for you


You have a great deal of reading to do, both on BIIL and AIC ratings.