In a move aligned with international practices, India is considering transitioning from the Wholesale Price Index (WPI) to the Producer Price Index (PPI), stated an unnamed official. Most G20 countries have already adopted the PPI, and the National Statistical Commission (NSC) is currently evaluating a working group report on the roadmap for introducing the PPI. The official noted that the recommendations from the NSC are awaited.
The official, who chose not to be named, indicated that the initial plan might involve using both WPI and PPI simultaneously. However, the eventual phase-out of WPI could occur after a few years. Currently, India stands among the few G20 countries still utilizing WPI, while others, including China, have embraced the PPI.
The discussion around adopting the PPI has been ongoing for several years. A working group was formed to determine the methodology and data requirements for this shift. In 2019, another working group was constituted to revise the existing series of WPI, considering a new base year and suggesting additions or deletions in the basket of goods. This group was also tasked with proposing a roadmap for transitioning from WPI to PPI.
Globally, PPI tracks price movements in both goods and services. However, the initial implementation of PPI in India is expected to cover goods only, according to the official.
Simultaneously, efforts are underway to revise the base year for the Wholesale Price Index from 2011-12 to 2017-18. Such a revision is aimed at presenting a more realistic depiction of the country’s price situation. The Department for Promotion of Industry and Internal Trade (DPIIT) issued a draft technical report in June 2021, suggesting the revision of the base year for WPI and proposing the addition of around 480 new items to the index.
WPI serves as a key indicator, measuring the average change in prices of a fixed set of commodities at the initial stage of a commercial transaction over a specific period, referenced to a base year. The shift from WPI to PPI is considered more consistent with the System of National Accounts for use as the deflator.
To facilitate the introduction of the Producer Price Index in India, a Working Group was constituted in August 2014 to determine the methodology and data requirements.
By PTI
