Faced with criticism for its wholesale price index which was released 18 months ago, the government has set up another committee to revise the index to take into account structural changes in the economy since 2004-05 and present a better picture of price situation.
The wholesale price index (WPI) is used to calculate inflation in the country.
There were reports of error in the updated series of the WPI. Economists, as well as RBI, too have been critical of the official data.
The 31-member group, to be chaired by Planning Commission Member Mr Saumitra Chaudhuri, would suggest improvements for “enhancing the reliability” of the official series of WPI/PPI/BSPI, an official in the Department of Industrial Policy and Promotion said.
The group would also suggest methods for ensuring smooth flow of data and also to look into the possibility of having a single agency for collecting data for WPI and index of industrial production (IIP).
It will look into issues like selecting the most appropriate base year for the preparation of a new official series of index numbers of WPI, producers price index (PPI) and business service price index (BSPI) in India.
Besides, the working group would review commodity basket of the current series of WPI, PPI and BSPI, the official said adding it would evolve a suitable system for allocation weight to the various commodities to be included in the index basket.
The new series of the WPI, the government’s main tool for monitoring the priceline, was launched in September 2010 to give a more accurate picture of inflation.
The new WPI, with 2004-05 base, comprised 676 items as against 435 items in the old index. The number of price quotations for the new series was 5,482 as against 1,918 in the old series.
The working group will submit its final report by December 31.