New Delhi, Sep 14 (Calcutta Tube) Ice-cream, microwave ovens, mineral water and dish antenna are among 241 new items in the basket of commodities making up the official wholesale price index, reflecting changes in India’s price line and consumption pattern better.
Commerce and Industry Minister Anand Sharma Tuesday unveiled the new index that is used as the main indicator of India’s underlying inflation, as also the rate of change in the wholesale prices of commodities. He said 2004-05 will be the new base year.
The index now has 676 items, against 435 items under the previous series of 1993-94 and 447 items when the base year was 1981-82. The bulk of the items have been added to the sub-group of manufactured products. The other two sub-indices are primary articles and fuels.
‘The new series will give a robust, truer picture of the Indian economy,’ Sharma said at the press conference here to announce the new series. ‘The new basket of items will help in monitoring the price scenario in a better way.’
Planning Commission Deputy Chairman Montek Singh Ahluwalia too later echoed Sharma’s view, describing the new WPI as ‘in sync with the latest consumption pattern’ as it included a wider range of consumer items.
‘They have rebased it (WPI) in sync with the latest consumption pattern. It is a better indicator of what the inflation rate is now,’ Ahluwalia told reporters.
The new series is based on the recommendations of a working group that was set up under Planning Commission Member Abhijit Sen, which in its technical report submitted in May 2008 recommended the change of the base year to 2004-05.
A committee of secretaries at a meeting Aug 9 had approved the release of new series of WPI with 2004-05 as its base and directed that it may should be released Sep 14.
The minister said based on the new series for calculating the WPI, India’s annual rate of inflation for August was 8.51 percent, over one percentage point below 9.78 percent rise estimated for July.
‘It is desirable to change the base because over a period of time consumption (pattern) of consumers changes, so any sensible price index should get rebased,’ Ahluwalia said.
‘Updation of inflation (index) was absolutely essential because the earlier index had gone out of range. We should not mind the change at all,’ he further added.
The new series has also altered the weight attached to each commodity group.
Now, manufactured items now has a higher weight of 64.972 as against 63.749 earlier. The weight for fuels has also increased to 14.910 against 14.226. But for primary articles, the weight is down at 20.118 against 22.025.
Officials said in a bid to reflect the actual consumption pattern, the new series drops as many as 200 items sach as typewriters, video cassette recorders, to make a room for items like computers, refrigerators, televisions and video disc players.
The concept of wholesale price index is to capture all transactions carried out in the domestic market. The concept has now been refined to capture the transactions only at the first point of bulk sale.
Officials said the government is also working on a two new indices to reflect the changes in the cost of services — one on financial services and the other on trade and transport.