Ramesh Chand to head the Working Group on the revision of WPI Base

The government of India has set up a Working Group to revise the base year of the Wholesale Price Index (WPI) and also suggest a road map to gradually transit from the existing WPI to the Producer Price Index.

The base year of the present WPI is 2011-12 and it is to be switched to 2022-23.

The notification was issued by the government of India on 2 January 2025.

The Working Group will submit its report to the Office of the Economic Adviser at the  Department for Promotion of Industry and Internal Trade (DPIIT) within 18 months.

Head of the Working Group and its composition 

The Working Group will be headed by Professor Ramesh Chand, a member of the NITI Aayog, and consists of 16 other members and a member secretary. The Deputy Director General, Department for Promotion of Industry and Internal Trade (DPIIT) as the Member Secretary of the Working Group.

Terms of Reference of the Working Group 

Following are the terms of reference of the Ramesh Chand Working Group.

1. suggest the commodities that are to be included in the WPI and PPI with the base year 2022-23 in the light of structural changes in the economy.
2. Review and suggest changes in the existing system of price collection.
3. Suggest computational methodology to be adopted for WPI / PPI.
4. Examine the Technical Advisory Committee on Statistics of Prices & Cost of Living methodology for compilation of PPI and suggest any change in it.
5. Recommend roadmap for transition from WPI to PPI.

5. Recommend any improvement to increase the reliability of WPI / PPI data.

About WPI and CPI and PPI 

At present, there are two inflation indexes in the country WPI and Consumer Price Index(CPI).

WPI

• The WPI I captures the average wholesale prices of goods. It includes only basic prices and does not include taxes, rebate/trade discounts, transport, and other charges.
• It is also called a producer-level index. 
• The WPI includes only goods and services that are not included.
• It is used as a GDP deflator to calculate real GDP from nominal GDP.
• The WPI data is released monthly by the DIIPT, Union Ministry of Commerce and Industry.

Consumer Price Index (CPI)

• CPI is also called retail inflation. 
• It includes the average price of the goods and services used by the consumers. 
• The CPI is used by the government/Reserve Bank of India to target inflation, wage revision, dearness allowances, etc.
• The CPI data is released monthly by the National Statistic Office (NSO), Union Ministry of Statistics, and Programme Implementation.

Proposed Producer Price Index (PPI)

• PPI will measure wholesale prices of goods and services by tracking prices at different stages of production.
• The PPI will also include the service sector which is a major part of the Indian economy and is not included in calculating WPI.
• In most of the developed countries, the PPI has been replaced as per the internationally agreed System of National Accounts (SNA) to compile measures of economic activity.
• The Indian government has been trying to find a suitable methodology to construct the PPI that is an improvement to the existing WPI.
• The Working Group is expected to construct a suitable methodology so that India can transition from WPI to PPI.

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