'India planning to move from WPI to PPI in future like most G20 nations'

PPI globally tracks price movements in both goods and services. "Initially PPI in India will only include goods," the NSC official said

India is planning to move from the Wholesale Price Index to Producer Price Index (PPI) in future as most of the G20 countries follow this practice, an official said.

The official said that the National Statistical Commission (NSC) is examining the working group report on the roadmap for introducing the PPI and their recommendations are awaited.

"It is with Statistical Commission, so we will wait for the panel recommendation," the official, who did not wish to be named, said.

When asked about the future plan on this, the government official said: "Initially, we will probably go with both (WPI and PPI) and after a few years, we may phase out WPI, because we are one of the few countries among G20 which still have WPI. All other including China use PPI".

 

The PPI has been discussed for the past several year. A working group was set up a few years back to determine the methodology and data requirements to move ahead.

In 2019, the government constituted a working group for revision of the current series of WPI that has 2011-12 as its base year.

The task before the group was to suggest a new base year for WPI and suggest additions and deletions of commodities in the basket of goods whose prices are tracked to draw the index.

The working group was also empowered to recommend a roadmap for moving to the Producer Price Index (PPI) from WPI.

PPI globally tracks price movements in both goods and services.

"Initially PPI in India will only include goods," the official said.

Work is also underway on revising the Wholesale Price Index (WPI) base year from 2011-12 to 2017-18.

Revising base year to 2017-18 for computation of wholesale inflation would help in presenting a more realistic picture of the price situation in the country.

The Department for Promotion of Industry and Internal Trade (DPIIT) in June 2021 issued a draft technical report of a working group, which suggests revising the base year of wholesale price index and addition of about 480 new items such as medicinal plants, pen drive, lifts, gymnasium equipment and certain motorcycle engines in the new series.

WPI is a key indicator to measure the average change in prices of a fixed set of commodities at the initial stage of a commercial transaction over a given period of time with reference to a base year.

Producer Price Index has replaced Wholesale Price Index in most countries. PPI measures the average change in the price a producer receives for his goods/services sold in the domestic market/exports.

PPI is considered conceptually more consistent with the System of National Accounts for use as deflator. In order to determine the methodology and data requirements for introducing Producer Price Index in India, the government constituted the Working Group under my chair in August 2014.