"It is a very good proposal. No country in the world reports inflation on a weekly basis. Currently, a very large percentage of items are not reported. When items are not reported, basically they (the Department of Industrial Policy and Promotion) repeat the figures of the previous week. That means, in situations when inflation is rising, items are under-reported and when inflation is falling, items are over-reported. This problem could be solved through a monthly index," Ahluwalia told Business Standard today.
Ahluwalia's views come at a time when the finance ministry and the Reserve Bank of India, two of the main users of the WPI inflation data, have opposed the idea of a monthly release of the data. They want the present system to continue.
Economists have different views on the matter. Standard & Poor's Asia-Pacific chief economist Subir Gokarn feels if frequency is being traded off for accuracy, then it is a welcome move.
"However, if frequency is sacrificed and no accuracy is achieved, then that will be an even worse scenario. At least, more frequent data makes people more conscious of the inflationary situation," he said.
National Institute of Public Finance and Policy director Govinda Rao said the government could continue to have weekly data for internal analysis and release monthly data for public use.
"If the finance ministry thinks a monthly reference is not good enough, then it should try and make the weekly data more robust. Inefficient weekly data can only lead to inefficient measures. At present, the difference between provisional and final inflation numbers is also very large," he added.
