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.
- For the new series with base 2011-12=100, a Working Group was constituted on 19thMarch 2012 chaired by Late Dr Saumitra Chaudhuri, Member, erstwhile Planning Commission and comprised most stakeholders.
In the revised series, WPI will continue to constitute three Major Groups namely – Primary Articles, Fuel & Power and Manufactured Products.
Highlights of the changes introduced in the new series are summarised below:
- Updated item basket and weighting structure conforming to the structure of the economy in 2011-12.
- The increase in the number of items from 676 to 697. In all 199 new items have been added and 146 old items have been dropped.
- The new series is more representative with an increase in the number of quotations from 5482 to 8331, an increase by 2849 quotations (52%).
- In the new series of WPI, prices used for compilation do not include indirect taxes in order to remove the 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 now available for the longer duration.
- Item level aggregates for new WPI are compiled using Geometric Mean (GM) following international best 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.