Revision of base year of All-India Wholesale Price Index

  • The  Government  periodically  reviews and  revises the  base year  of  the macroeconomic indicators as a regular exercise to capture structural changes in the economy and improve the quality, coverage and representativeness of the indices.  
  • In  this direction, the base year  of All-India WPI has been revised  from  2004-05 to  2011-12 by the  Office of  Economic  Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry to align it with the base year of other macroeconomic indicators  like  the Gross  Domestic Product (GDP)  and Index of Industrial Production (IIP).
  • The Wholesale Price Index (WPI) series in India has undergone six revisions in 1952-53, 1961-62, 1970-71,1981-82, 1993-94 and 2004-05 so far.
  • The current series is the seventh revision.
  • The revision entails shifting the base year to 2011-12 from 2004-05, changing the basket of commodities and assigning new weights to the commodities.
  • It has generally been the practice to undertake the revisions on the advice of a Working Group constituted each time.
  • In the revised series, WPI will continue to constitute three Major Groups namely  Primary  Articles, Fuel &  Power  and  Manufactured Products.

New Features

  • In the new series of WPI, prices used for compilation do not include indirect taxes in  order  to  remove  impact  of  fiscal policy.  This  is  in consonance  with  international practices and  will   make  the  new  WPI conceptually closer to ‘Producer Price Index’.
  • A new “WPI Food Index” will be compiled to capture the rate of inflation in food items.
  • Seasonality of fruits and vegetables has been updated to account for more months as these are nowavailable for longer duration.
  • Item level aggregates for new WPI are compiled  using Geometric Mean (GM) following internationalbest practice and as is currently used for compilation of All India CPI.
  • A high level Technical Review Committee has been set up for the first time to carry out dynamic review process in order to keep pace with the changing structure of the economy.

Source: PIB

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