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Informist, Saturday, Oct. 4, 2025

 

NEW DELHI – The Ministry of Statistics and Programme Implementation has sought views and suggestions from experts, academicians, government bodies, state governments, financial institutions and other stakeholders on the treatment of items distributed free of cost through the government's public distribution system in the CPI compilation framework. The ministry is currently in the process of revising the retail inflation index, which also entails changing the base year to 2024 from 2012.

 

The need for appropriate treatment of freebies distributed through the public distribution system in the CPI framework has become more relevant in light of the government's flagship food security scheme Pradhan Mantri Garib Kalyan Anna Yojana. Under the scheme, which covers 75% of the rural population and 50% of the urban population, the government provides free food grains to eligible households. 

 

According to the statistics ministry, free food items distributed through the public distribution system should not be excluded from the CPI framework. It has proposed to account for such items through a weighted average of free, subsidised, and market prices. Under this approach, if some households get food grains free while others pay a subsidised rate, the CPI will reflect a state-level average price to ensure that inflation captures real consumption costs.

 

The other concern is state governments switching policies to shift to free-of-cost distribution from distributing at a subsidised rate or vice-versa. To address this, the ministry also plans to replace separate indices for "PDS rice" and "market rice" with a single combined index. This way, even if the government in a particular state decides to shift to free distribution from a subsidised rate, the index will reflect it without distorting inflation measurement.

 

The ministry had discussed the proposed methodology with the International Monetary Fund in August and got feedback that the method would fully reflect price changes should nominal prices be introduced for the freebies, and it does not overstate or distort price changes. The statistics ministry is open to taking views and suggestions from the public till Oct. 22. The ministry is likely to announce the new inflation series next year. End

 

 

Reported by Krity Ambey

Edited by Deepshikha Bhardwaj

 

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