Government revamps WPI revision team

  1. The government has reconstituted the working group tasked with revising the current wholesale price index (WPI).
  2. The terms of reference(ToR) of the working group are (a)select the most appropriate Base Year for the preparation of a new official series of Index Numbers of WPI and Producer Price Index (PPI) in India (b)review commodity basket of the current series of WPI (c)review the existing system of price collection in particular for manufacturing sector.
  3. The revision of WPI is needed as 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.
  4. The Office of Economic Adviser,Department for Promotion of Industry & Internal Trade will be the nodal office for the Working Group and will process the recommendation of the Group for further necessary action.
  5. Wholesale Price Inflation(WPI) tracks changes in the price of goods in stages before the retail level i.e. goods that are sold in bulk and traded between organizations instead of consumers.
  6. It is measured by the Wholesale Price Index.The index basket of the WPI covers commodities falling under the three major groups namely Primary Articles, Fuel and Power and Manufactured products.It is important to note that WPI does not cover services.
  7. Producer price index(PPI) measures the average change in the price a producer receives for his goods and services sold in the domestic market and exports.
  8. While WPI does not include services but PPI includes services thus making the index more inclusive.PPI eliminates the multiple counting bias which is inherent in the WPI.

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