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Government sets up working group to revise WPI, give roadmap to shift to PPI

The 18-member group may recommend a roadmap for switch over from WPI to PPI, the commerce and industry ministry said.

, ET Bureau|
Updated: Jun 27, 2019, 11.25 PM IST
The current series of WPI with 2011-12 as base year was introduced in May 2017.
NEW DELHI: The government has set up a working group under Niti Aayog member Ramesh Chand to revise the current series of Wholesale Price Index (WPI) with base 2011-12 and devise a new Producer Price Index (PPI).

The 18-member group may recommend a roadmap for switch over from WPI to PPI, the commerce and industry ministry said in a statement on Thursday. PPI measures the average change in the price a producer receives for his goods and services sold in the domestic market and exports.

The group will review the commodity basket of the current series of WPI, suggest changes in commodities in the light of structural changes in the economy witnessed since 2011-12 and decide on the computational methodology to be adopted for monthly WPI/PPI.

“There have been discussions to switch to PPI for a long time and it is a better indicator because it shows the pressure on inflation from its origins as it does not include taxes like WPI does,” said a member of the group on condition of anonymity.


The government had in 2014 constituted a committee under Professor BN Goldar to devise a PPI after the Reserve Bank of India began considering consumer price inflation as a better gauge of inflation than WPI.

The panel had then said that the primary objective of shifting from WPI to PPI is to do away with the bias of double counting in WPI and to compile indices that are conceptually consistent with the National Accounts Statistics for use as deflators.

The newly constituted group includes four officials from National Statistics Office, two from the finance ministry, and one each from the Department of Agriculture, Department of Consumer Affairs, Ministry of Petroleum and Natural Gas and RBI.

Other non-official members of the group include SBI chief economist Soumya Kanti Ghosh, economist Surjit Bhalla, and Prime Minister's Economic Advisory Council member Shamika Ravi, among others.

WPI revision
The current series of WPI with 2011-12 as base year was introduced in May 2017.

“Since 2011-12, significant structural changes have taken place in the economy,” the ministry said, adding that it has become necessary to examine the coverage of commodities, weighting diagram and related issues pertaining to the existing series of index numbers of WPI.

“The Terms of Reference of the Working Group are to examine the existing methodology of compilation of PPI approved by Technical Advisory Committee on series of prices and Cost of Living,” the ministry said.

The group will also select the most appropriate base year for the preparation of a new official series of index numbers of WPI and PPI in India and review the existing system of price collection in particular for manufacturing sector and suggest changes for improvement.

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