On August 4, 2017, in a written reply to a question in Lok Sabha, Arjun Ram Meghwal, Minister of State for Finance and Corporate Affairs stated that Government has revised the base year of All-India Wholesale Price Index (WPI) from 2004-05 to 2011-12.
The revision of the base year of the macroeconomic indicators is a regular exercise to capture structural changes in the economy and to improve the quality, coverage and representativeness of the indices.
- The base year revision of WPI has aligned the series with the base year of other macroeconomic indicators such as the Gross Domestic Product (GDP) and Index of Industrial Production (IIP).
- It is to be noted that Government has modernized the data collection methods by adopting international norms and global best practices such as submission of data online through web portals and use of computer assisted personal interviewing methods.
Salient Features of new series of Wholesale Price Index (WPI):
In the revised series, WPI will continue to constitute three Major Groups namely Primary Articles, Fuel & Power and Manufactured Products.
- The new series has 697 items as compared to 676 items in old series and is more representative with increase in number of quotations from 5482 to 833
- New series of WPI does not include indirect taxes. This is in consonance with international practices and will make the new WPI conceptually closer to Producer Price Index.
- Weightage of manufactured items, fuel and power has decreased, whereas weightage for primary articles has increased.
- Anew “Food Index” has been compiled combining the “Food Articles” under “Primary Articles” and “Food Products” under “Manufactured Products”. Together with the Consumer Food Price Index released by Central Statistics Office, this would help monitor the price situation of food items better.
- Seasonality of fruits and vegetables has been updated to account for more months as they are now available for longer duration.
- Item level aggregates for new WPI are compiled using Geometric Mean (GM) instead of Arithmetic Mean.
- A technical review committee has been established which will identify new items to be included so as to keep the series relevant.