Base Year of Wholesale Price Index Revised to 2022-23

#Economy #Inflation #Infrastructure #GS-3

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The Ministry of Commerce and Industry announced an important update for India's economic tracking system. It changed the base year of the Wholesale Price Index (WPI) from 2011-12 to 2022-23.
Along with this update, the government plans to slowly phase out the old WPI system and replace it with modern pricing metrics.

This update serves as a major overhaul of India's macro-pricing statistics. The government upgraded the basket of goods and updated the economic baseline to 2022-23.
The new system introduces a phased dual-index release window. The upcoming Producer Price Index (PPI) will eventually become the nation's primary metric for tracking business-level inflation.

The initiative aims to modernize India's pricing data framework completely. It corrects structural problems caused by using outdated base years.
It also aligns India's data systems with the official recommendations of the International Monetary Fund (IMF).

The total number of commodities tracked in the WPI basket increased from 697 to 957 items. This change captures modern industrial activity much better than before.
For the first time, clean energy sources like Solar and Wind power are included under the electricity tracking group alongside Nuclear Electricity.
Crude petroleum and natural gas moved out of primary articles into the Fuel and Power group. This unifies all major energy inputs under one statistical category.
The method for calculating item weights changed to Gross Value of Output (GVO). This replaces the old net traded value method and reflects domestic production accurately.
Elementary indices now use a short-term chain-based method instead of the rigid long-term formulation used in the 2011-12 series.
Missing price data points now use the targeted mean imputation method. This completely phases out the older and error-prone carry-forward approach.
The government will release an output Producer Price Index (OPPI) and an experimental trial input producer price index for the manufacturing sector.
A service PPI now covers seven crucial sectors: Banking, Securities Transactions, Insurance, Pension Fund Management, Railways, Air Passenger, and Telecom.
The WPI, output PPI, and service PPI use basic prices without taxes and margins, while input PPI uses the purchaser's price to show actual factory costs.