Informist, Thursday, Jul 4, 2024

--Industry secy: Discussed PPI model with statistics min

--Industry secy: India's PPI model final, IMF also reviewed

--Industry secy: Only procedural work left before we launch PPI

--Industry secy:Initially both PPI, WPI to continue; to phase out WPI

--Industry secy: Cannot give timeline on when PPI may be launched

--Industry secy: CPI, WPI may have different base years upon revision

NEW DELHI – The government has finalised a Producer Price Index model, which has also been reviewed by the International Monetary Fund, said Rajesh Kumar Singh, secretary, Department for Promotion of Industry and Internal Trade, today. However, the government has not set a timeline for the launch of the Producer Price Index, Singh said.

The government will initially release both the Producer Price Index and the Wholesale Price Index data, but it eventually plans to phase out WPI, Singh said.

The Producer Price Index, which measures the average change in the price a producer receives for his goods and services sold, has replaced the Wholesale Price Index in most countries. The Producer Price Index is considered a more reliable index to measure inflation at the producer level, compared with the WPI, which measures inflation at the wholesale level.

"DPIIT (Department for Promotion of Industry and Internal Trade) and MoSPI (Ministry of Statistics and Programme Implementation) have held discussions and have almost finalised the model for PPI (Producer Price Index)," Singh said at a press conference. "Only procedural work is left," he said.

Informist had exclusively reported in March that the Department for Promotion of Industry and Internal Trade is ready with the pilot of the Producer Price Index with 2017-18 as the base year, and the government aims to launch the index in 2024-25. The Producer Price Index only considers the index for output prices and does not include the Producer Price Index for input prices or that for services, Informist had reported.

In May, Informist reported that the National Statistical Office under the statistics ministry had tested the Producer Price Index as GDP deflator for the past three years and found minimal changes in the real GDP data. As such, the statistics office told the commerce ministry that it will not use the Producer Price Index as a deflator to calculate GDP for now and, will instead continue to use the WPI and the Consumer Price Index.

The WPI measures the average change in wholesale prices of goods and is primarily used as a GDP deflator in India, along with CPI. The current series of WPI was adopted in 2017 with 2011-12 as the base year. On the other hand, a Producer Price Index measures the average price change received by the product manufacturer or service supplier and excludes indirect taxes. It also accounts for services, which the WPI does not. However, the pilot index prepared by the industry department does not include services or input prices.

Singh also said that the CPI and WPI may have different base years when the two indices are revised. The government has constituted a 26-member committee to decide on the base year revision of GDP. The Advisory Committee on National Accounts Statistics will also advise the government on the alignment of GDP with other indices such as the CPI, WPI, Producer Price Index, and the Index of Industrial Production. End

Reported by Krity Ambey

Written by Shubham Rana

Edited by Akul Nishant Akhoury

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