Base Year Revision of India's Key Economic Indicators: GDP, CPI, IIP and WPI
A single, exam-ready explainer of the base year revisions across the four principal indicators, GDP and IIP to 2022-23, CPI to 2024, and the revision of WPI to 2022-23 alongside the new Producer Price Index.
What Base Year and Rebasing Mean
In February 2026, the Ministry of Statistics and Programme Implementation (MoSPI) carried out a wide revision of India's principal economic indicators. The base year of GDP and the Index of Industrial Production (IIP) has moved to 2022-23, the Consumer Price Index (CPI) to 2024, and the Wholesale Price Index (WPI) is being revised to 2022-23 along with the introduction of Producer Price Indices (PPIs).
What is Rebasing?
Rebasing is the process of updating the base year using revised and improved data to reflect the current structure of the economy. The new base then serves as the reference point for estimating GDP and its components, as well as key indicators such as the Consumer Price Index (CPI) and the Index of Industrial Production (IIP) going forward.
New Base Year 2022-23
Gross Domestic Product (GDP) is the most widely used indicator to measure the size and performance of an economy. It represents the total value of all final goods and services produced within a country during a specific period, typically one year. In February 2026, the Ministry of Statistics and Programme Implementation released the revised GDP series with 2022-23 as the new base year, which shows a modest reduction in the estimated size of the economy and changes in sectoral composition. The new series integrates data from ASUSE, PLFS, GST, and PFMS, and uses the Benchmark-Indicator methodology, where estimates for the previous financial year are extrapolated using relevant indicators of economic and institutional sector performance. This is the 9th base year revision of the GDP series.
The Benchmark-Indicator methodology works in two steps. First, a reliable, comprehensive estimate for the previous financial year acts as the benchmark. Second, this benchmark is extrapolated to the current year using relevant indicators, such as the index of industrial production, corporate tax data, PLFS employment figures, or GST turnover, that reflect the performance of various economic and institutional sectors.
The 2011-12 revision introduced the Market Capitalisation method for corporate sector estimation, replacing the older establishment-based approach, which brought India in line with the System of National Accounts (SNA) 2008 framework.
Why GDP Base Year Has Been Revised to FY 2022-23
The year 2022-23 has been selected as the new base year as it represents the most recent "normal" period following the disruptions of 2019-2021. The years 2019-20 and 2020-21 were heavily impacted by the COVID-19 pandemic, which temporarily distorted consumption trends and industrial activity.
Calculation of Quarterly GDP Estimates
The National Statistical Office (NSO) and MoSPI calculate the quarterly GDP estimates using Benchmark-Indicator, a standard method used worldwide following the System of National Accounts (SNA) 2008 and the IMF's Quarterly National Accounts Manual 2017. Annual GDP estimates act as a reference point or benchmark, and high-frequency data such as monthly or quarterly indicators are applied to these benchmark estimates to estimate quarterly GDP.
Modernizing India's GDP Estimation
The revised GDP series strengthens estimation by integrating several new and improved data sources. The improvements reduce dependence on proxy indicators and ensure that national income estimates better reflect the evolving structure of the economy.
Data Sources Being Used in the New Series
- Household Sector Measurement: Earlier, estimates for the household sector relied largely on growth rates between benchmark surveys or proxy indicators. In the revised series, actual level estimates are being derived from regular annual surveys such as the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the Periodic Labour Force Survey (PLFS).
- Use of GST Data: GST data supports the allocation of all-India private corporate sector estimates across states and is used for cross-validation in annual accounts. It also plays a key role in quarterly estimation. The new series makes wider and more systematic use of GST data across manufacturing and non-financial services sectors.
- e-Vahan Database: Data from the e-Vahan portal are used to estimate Private Final Consumption Expenditure (PFCE) related to road transport services. PFCE is the expenditure incurred on final consumption of goods and services by the resident households of the country.
- Public Finance Management System (PFMS): PFMS data is used to compile central government accounts and distribute them across states. This enables the use of actual expenditure figures at the First Revised Estimates (FRE) stage, rather than relying on Revised Estimates (RE).
Incorporation of Recent Studies
Updated rates and ratios based on recent expert studies have been incorporated to improve estimation quality. These include a grass and fodder study by the Indian Grassland and Fodder Research Institute (agriculture), fisheries studies by the Central Marine Fisheries Research Institute and the Central Inland Fisheries Research Institute, a study on milk and milk products by the National Dairy Research Institute (for PFCE), and a study on transport services by Jawaharlal Nehru University (for PFCE).
Key Methodological Improvements in the New GDP Series
- Refined Deflation Techniques: Double deflation is now applied in manufacturing and agriculture, while single extrapolation is used in other sectors. Single deflation has been discontinued. Deflators are applied at a more granular level, with over 260 item-level CPI indices incorporated. A deflator aims to break down any change in prices into a pure price change between two time periods for a like-for-like product.
- Integration of Supply and Use Tables (SUT): The SUT framework has been aligned with National Accounts to reduce discrepancies between production and expenditure based GDP estimates. By matching total supply with total demand, this approach improves internal consistency.
- Updated Rates and Ratios: Compilation parameters have been revised using recent survey findings and studies conducted by MoSPI in collaboration with expert institutions.
- Segregation of Multi-Activity Corporations: Previously, value added by diversified enterprises was assigned to their principal activity. With the availability of MGT-7/7A filings, value added is now distributed across activities more accurately.
- Improved Estimation of PFCE: A mixed methodology is adopted, combining enhanced use of the Household Consumer Expenditure Survey, direct estimation from production and administrative data, and the commodity flow approach. The updated COICOP 2018 classification has also been implemented.
India compiles its GDP estimates in line with the 2008 System of National Accounts (SNA 2008), the internationally accepted statistical framework. With the United Nations Statistical Division transitioning to SNA 2025, expected to be adopted globally around 2029-30, India intends to align with the updated standard in its next base year revision. As a subscriber to the IMF's Special Data Dissemination Standard (SDDS), India adheres to globally recognised benchmarks of statistical quality and transparency.
Back-series data is expected to be released by December 2026. As per established practice, estimates will be recalculated using the revised methodology up to the previous base year and then linked at a disaggregated level to extend the series back to 1950-51. The base year revision of WPI is also in progress, and until the updated WPI becomes available, the existing WPI will continue to be used as a deflator.
Need for Base Year Revision
- IMF Concern: In November 2025, the IMF awarded India's national accounts data a 'C' grade in its Data Adequacy for Surveillance (DAS) assessment. India scored an 'A' for timeliness and a 'B' for granularity, but its coverage quality, especially of the informal sector and use of outdated base-year data, drew sharp criticism. The new series directly addresses these concerns.
- Reflecting Structural Changes: Periodic revision ensures that new products, technologies, and changing consumption patterns are reflected in the GDP figures. An outdated base year assigns zero weight to new goods and services such as smartphones, OTT platforms, and ride-sharing, systematically underestimating their contribution.
- Incorporating New Data Sources: The revision incorporates improved datasets such as ASUSE, PLFS, and GSTN data.
- Better Representation of Real Growth: By changing the base, the estimates remove the influence of inflation, offering a truer picture of real economic growth.
- Updated Price Indices: Relative prices change over time, and using old base year prices distorts volume comparisons. Regular revision ensures GDP at constant prices reflects real production changes rather than price distortions.
- Updating Economic Weights: Periodic revisions update the weights assigned to various industries, reflecting the current importance of sectors like technology and services over traditional ones.
- International Comparability: Revisions align local data with international best practices. As per IMF and UN recommendations, countries should update their base year every five to ten years.
- Effective Policy Formulation: Government programmes such as FRBM targets depend on the fiscal deficit to GDP ratio, debt to GDP ratio, tax to GDP ratio, and sector-wise budget allocations. An outdated base year skews these ratios and can misguide fiscal planning.
Role of Base Year in GDP Calculation
Real GDP Calculation: The base year acts as a benchmark for calculating Real GDP by providing a fixed set of prices from a stable year to value goods and services. It filters out inflation, ensuring reported growth reflects actual production increases rather than price changes.
Price Index: The base year's prices are used to create a price index, such as the GDP deflator, a measure of the overall price level of all final goods and services produced in an economy.
New Measurement Framework, Key Improvements
- Double Deflation (most significant change): The old series used a single deflator for both outputs and inputs in manufacturing. The new series applies double deflation, where outputs and inputs are deflated separately using their respective price indices (260+ granular CPI indices). This eliminates the distortion where volatile commodity input prices masked real manufacturing value-added growth.
- Supply and Use Tables (SUT) Integration: For the first time, the SUT framework has been formally integrated with National Accounts. SUT maps what every industry produces (supply) against what every sector consumes (use). A balanced SUT ensures that production-side GDP and expenditure-side GDP match, directly reducing statistical discrepancy.
- COICOP 2018 for Private Consumption: PFCE is now estimated using the UN's Classification of Individual Consumption according to Purpose (COICOP) 2018, incorporating survey and administrative data for greater granularity.
- Informal Sector via ASUSE and PLFS: ASUSE and PLFS are now used annually to capture household businesses, self-employed workers, and gig workers, improving coverage of India's large informal economy.
- Proportional Denton Method for Quarterly GDP: The new series replaces the older pro-rata benchmarking with the Proportional Denton method, ensuring quarterly estimates align smoothly with annual totals without artificial jumps at revision points.
- Multi-Activity Enterprise Segregation: Large diversified corporations previously had all value-added attributed to their primary activity. Now, corporate filings are used to distribute output across actual activities, improving sectoral accuracy for financial services, IT, and conglomerates.
Challenges Posed by Revisions: The Credibility and Comparability Problem
- Back Series Not Yet Available: MoSPI has released data only from FY23 to FY26. The back series extending to 1950-51 is expected only by December 2026. Without it, long-run trend analysis remains a statistical void.
- Nominal GDP Contraction and Fiscal Pressure: The new series reduces nominal GDP by approximately 3 to 4 percent for FY26, from Rs. 357 lakh crore to Rs. 345.47 lakh crore, trimming the economy by about Rs. 12 lakh crore. Since the fiscal deficit is expressed as a percentage of nominal GDP, the FY26 target of 4.4 percent effectively rises to about 4.5 percent. To hit the FY27 target of 4.3 percent, India would need a nominal growth rate of 13 to 14 percent.
- WPI Base Year Mismatch: While GDP and IIP are now on 2022-23 and CPI on 2024, the WPI revision is still in progress. Since WPI is used as a deflator across manufacturing sectors, the interim use of the old WPI creates inconsistency in real GVA measurement.
- Implicit GDP Deflator Puzzle: Nominal GDP grew at 8.6 percent in FY26 while real GDP grew at 7.6 percent, implying an implicit GDP deflator of barely 1 percent, even though consumer inflation was far higher, with CPI averaging 4 to 5 percent in 2025.
- Informal Sector Undercounting: India's informal economy, contributing roughly 50 percent of GDP, remains difficult to measure. New methodologies aim to capture informal sector growth better but risk missing a large portion of informal sector contractions.
- Delayed Revision Schedule: India's last base year revision was 2011-12, over a decade ago. The RBI's Report on Currency and Finance (2023) recommended updating to 2017-18 at the earliest, but the exercise remained pending.
- Credibility at Stake: If India's GDP growth is seen as statistically inflated, FDI and ratings may suffer. For example, Argentina's 2023 GDP revision exposed a smaller-than-claimed economy, triggering market panic.
- Comparability with Old Series Remains Limited: The 2015 revision introduced GVA at basic prices, and the 2026 revision adds double deflation and Supply-Use Tables. Each such change improves accuracy but makes pre and post revision data structurally incomparable.
- Census Delay Weakens Population-Based Estimates: India's last census was in 2011, and the 2021 Census has been delayed. Using 2011 census projections for a 2022-23 base economy introduces systematic error in per capita income, PFCE, and labour productivity estimates.
The 2022-23 base year revision is India's most methodologically rigorous GDP overhaul yet, with double deflation, SUT integration, and real-time administrative data marking a genuine qualitative leap. Its credibility will ultimately be determined not by its launch, but by what follows: a robust back series by December 2026, a timely WPI revision, the Census, and transparent Sources and Methods documentation.
New Base Year 2024
The Ministry of Statistics and Programme Implementation (MoSPI) launched a new CPI series in February 2026 by shifting the base year for CPI computation from 2012 to 2024, in order to account for shifts in household expenditure, market structure, and consumption as reported in the 2023-2024 Household Consumption Expenditure Survey. The new CPI series adopts COICOP 2018 (Classification of Individual Consumption According to Purpose) and classifies the expenditure into 12 divisions, further classified into sub-classes.
- One of the most consequential and least discussed changes is India's shift to the COICOP-2018 classification system. Earlier, inflation was measured using just six broad consumption groups, many of which bundled very different expenses together. Under the new framework, CPI is organised into 12 clearly defined divisions, following international standards used by most major economies.
- COICOP stands for Classification of Individual Consumption According to Purpose, which is a way of saying let us organise spending by what people actually pay for. Rent stays with rent, hospital bills stay with healthcare, and school fees stay with education. This is how most countries measure inflation.
How Has the CPI Changed?
| Item | Old | New | Change |
|---|---|---|---|
| Food and beverages | 45.9 | 36.8 | -9.1 |
| Housing, water, electricity, gas, other fuels | 16.9 | 17.7 | 0.8 |
| Transport | 6.4 | 8.8 | 2.4 |
| Clothing and footwear | 6.5 | 6.4 | -0.1 |
| Health | 5.9 | 6.1 | 0.2 |
| Personal care, social protection and miscellaneous goods and services | 3.9 | 5.0 | 1.1 |
| Furnishings, household equipment and routine household maintenance | 3.8 | 4.5 | 0.7 |
| Information and communication | 2.2 | 3.6 | 1.4 |
| Education services | 4.5 | 3.3 | -1.1 |
| Restaurants and accommodation services | 0.0 | 3.3 | 3.3 |
| Paan, tobacco and intoxicants | 2.4 | 3.0 | 0.6 |
| Recreation, sport and culture | 1.7 | 1.5 | -0.2 |
- The key change in the new CPI series is weight realignment. Food and beverages now carry a lower share, reflecting reduced household spending on staples, while housing, healthcare, transport, communication, recreation and personal care have gained weight.
- The items and their weights are based on the Household Consumption Expenditure Survey (HCES) 2023-24, which better captures the current overall consumption pattern.
- Inclusion of Online Marketplaces: For the first time, prices from 12 online marketplaces have been incorporated into the CPI calculation.
- Alignment with International Standards: The revised series follows the COICOP 2018 framework, incorporating 12 consumption categories in line with global practices.
- Greater Granularity and Global Comparability: The transition from 6 broad groups to 12 detailed divisions enhances classification depth and improves comparability with international inflation benchmarks.
- New CPI Basket: The new basket contains 358 goods and services, up from 299 in the erstwhile basket.
Newly Added Items
Rural housing; Online media service provider / streaming services; Value-added dairy products; Barley and its product; Pen-drive and external hard disk; Attendant; Babysitter and exercise equipment.
Items Removed
VCR / VCD / DVD player and hiring charges; Radio; Tape recorder; Clothing second-hand; CD / DVD audio / video cassettes; Coir / rope.
Why the CPI Series Has Been Changed?
The earlier CPI series was anchored to a 2012 base year. Over the past decade, India's consumption structure has shifted meaningfully. GST stabilization, rising formalization, deeper financial inclusion, urbanization, digital commerce penetration and growing discretionary income have altered household spending patterns. Food, once the dominant component of expenditure, now occupies a relatively smaller share, while spending on housing, healthcare, mobility, communication, recreation and personal services has steadily increased. When the consumption basket does not evolve in line with such changes, inflation measurement risks overstating some pressures while understating others. In view of this, the new CPI series realigns weights to reflect current spending behaviour.
Why is the CPI Series Important for Monetary Policy?
CPI anchors India's inflation-targeting framework, guiding the RBI's monetary policy and interest rate decisions within the 2 to 6 percent tolerance band. It shapes policy rates, borrowing costs, liquidity and fiscal planning. A credible CPI helps maintain price stability and plays a key role in maintaining macroeconomic stability and anchoring expectations.
Significance of CPI
What the First Print of the New CPI Series Reveals
- The 2.75 percent inflation reading suggests inflation pressures remain contained. Food inflation was about 2.1 percent year on year, core inflation stood near 3.4 percent, and nearly 82 percent of sub-components recorded sub-4 percent inflation.
- The modest uptick in headline inflation was partly driven by precious metals and certain vegetables, rather than broad-based demand pressures. Excluding precious metals, headline inflation was only 1.9 percent.
- With food inflation benign, core pressures stable and the majority of components below 4 percent, the near-term inflation outlook appears manageable.
About Consumer Price Index (CPI)
CPI measures the change in the retail prices of a representative basket of goods and services consumed by households over time. It is published by the National Statistical Office (NSO) under MoSPI, released monthly, with base year 2024.
Types: CPI for Industrial Workers (CPI-IW), compiled by the Labour Bureau, with base year 2016 = 100 effective from September 2020; CPI for Agricultural Labourers (CPI-AL) and CPI for Rural Labourers (CPI-RL), compiled by the Labour Bureau, whose base year was updated to 2019 = 100 effective June 2025, replacing the old 1986-87 series; and CPI Combined, compiled by the NSO.
| Feature | WPI | CPI |
|---|---|---|
| Measures | Price changes at wholesale / producer level | Price changes at retail / consumer level |
| Coverage | Mostly goods (primary articles, manufactured items, fuel) | Goods and services consumed by households |
| Purpose | Tracks producer inflation, industrial and trade policy | Tracks consumer inflation, cost of living, monetary policy |
| Impact | Influences industrial pricing, trade, contracts | Influences RBI policy, subsidies, wages |
New Base Year 2022-23
The Ministry of Statistics and Programme Implementation (MoSPI) has revised the base year of the IIP from 2011-12 to 2022-23 to better reflect the current industrial structure and dynamics. The Index of Industrial Production is a composite indicator designed to measure the changes in the volume of production of an item basket over a period of time with respect to its base year. This is the 10th revision of the base year of All India IIP, and the first IIP was prepared with base year 1937. The new series was released on 1 June 2026 under the Technical Advisory Committee for base year revision (TAC-IIP).
Major Changes in the New Series of IIP
- Base Year Revision: The base has been revised to 2022-23 under the aegis of the Technical Advisory Committee for base year revision (TAC-IIP).
- Coverage: The series added Gas Supply, and Water Supply, Sewerage and Waste Management activities, while retaining the existing sectors of Mining, Manufacturing, and Electricity.
- Inclusive Mining Classification: It added minor minerals and rare earth minerals for better sectoral representation.
- Revamped Item Basket: The basket expanded from 839 items to 1,042 products (463 item groups, up from 407). Additions include cards with a magnetic stripe, CCTV cameras, articles of non-woven textiles, parts of aircraft and spacecraft, stents, and vaccines. Deletions include kerosene, fluorescent tubes and CFLs, tubes for bicycle, tricycle and rickshaw tyres, tubes for LMV tyres, printing machinery, and sewing machines.
- Enhanced Granularity: Mining is now split into fuel minerals, metallic minerals including rare earth minerals, and non-metallic minerals including minor minerals. The Electricity index separately tracks generation from renewable and non-renewable sources.
- Need of Change in Base Year: To capture emerging sectors, changing production patterns and evolving consumption trends, and to align IIP methodology with UN best practices and include new products and industries.
| Item basket | IIP 2011-12 series | IIP 2022-23 series |
|---|---|---|
| Mining and Quarrying | 1 | 3 |
| Manufacturing | 405 | 455 |
| Electricity & Gas Supply | 1 | 3 |
| Water Supply, Sewerage & Waste Management | -- | 2 |
| Total item groups | 407 | 463 |
The sector weights themselves shifted with the new base, as the comparison below shows. Manufacturing remains dominant, electricity and gas supply gained share, and water supply, sewerage and waste management entered as a separately classified activity.
Use-Based Categories and Compilation
The six use-based categories of the 2011-12 series continue in the new series: primary goods, capital goods, intermediate goods, infrastructure and construction goods, consumer durable goods, and consumer non-durable goods, though individual item classifications were reviewed and updated. The index is compiled using the Laspeyres fixed base type formula and disseminated using the NIC 2025 classification. At present the Wholesale Price Index is used as the deflator for value-based items, and after the release of the Output Producer Price Index the same will be utilised after examining its stability.
&PPI
WPI Revised to 2022-23 and PPI Introduced
The Government of India has approved the revision of the Wholesale Price Index (WPI) base year from 2011-12 to 2022-23 and the compilation of Producer Price Indices (PPIs).
- Revision of Base Year: The base year of the WPI has been revised from 2011-12 to 2022-23 to better reflect the current structure of the Indian economy and changes in production patterns.
- Introduction of PPI: The government has approved the compilation and release of Producer Price Indices, which measure changes in prices received by producers for goods and services.
- New Index Series: It introduces new series of the Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI), and Service Producer Price Index (Service PPI) for seven service sectors, namely Banking, Securities Transactions, Insurance, Pension Fund Management, Railways, Air Passenger Transport, and Telecommunications, with 2022-23 as the base year.
- Transition: The existing WPI series will continue to be released for five years alongside the new PPI series. Thereafter, WPI will be discontinued, allowing users sufficient time to shift to PPI-based contracts and assessments. The transition is in line with international best practices and recommendations of the IMF.
Key Highlights of the New WPI Series (Base Year 2022-23)
- Expanded Coverage: The number of commodities has increased from 697 to 957.
- Renewable Energy Inclusion: Solar, wind, and nuclear power have been added to the Electricity group.
- Better Energy Classification: Crude petroleum and natural gas have been shifted to the Fuel and Power group for improved tracking of energy prices.
- Revised Weighting Method: Commodity weights are now based on Gross Value of Output (GVO), better reflecting domestic production.
- Improved Index Calculation: A chain-based short-term formulation method has replaced the earlier long-term approach.
- Enhanced Data Imputation: The Targeted Mean Imputation method has replaced the carry-forward method for missing price data.
- Linking Factor Introduced: A linking factor based on 2024-25 indices has been developed to ensure continuity between the old and new WPI series.
The Government of India, on 15 June 2026, released Producer Price Index (PPI) data for both goods and services for the first time, and announced that the long-running Wholesale Price Index (WPI) will be discontinued and replaced by the PPI over the next five years. The switch follows the report of a working group headed by former NITI Aayog member Ramesh Chand, set up in December 2024 and submitting its report in April 2026, and is in line with the recommendation of the IMF.
- Output PPI (all commodities) for May 2026 stood at 109.6, up from 108.6 in April 2026.
- Output PPI inflation rose to 9.4 percent in May from 8.1 percent in April, while WPI inflation rose to 9.68 percent from 8.26 percent.
- Trial Input PPI for the manufacturing sector stood at 104.9 for May 2026, published on an experimental basis.
- Both WPI and PPI now use a revised base year of 2022-23, covering 957 items.
- Manufactured items carry the highest weight in Output PPI at 69.93 percent, and agriculture, forestry and fishing at 22.16 percent.
PPI measures the average change in selling prices received by domestic producers, while WPI measures prices at the wholesale or bulk transaction stage. CPI, compiled by the NSO under MoSPI, measures retail prices paid by consumers and is the RBI's headline inflation anchor. PPI and WPI are compiled by the Office of the Economic Adviser (OEA), under DPIIT, Ministry of Commerce and Industry. WPI, Output PPI and Service PPI are compiled on the basis of Basic Price, which excludes net tax and trade and transport margin, whereas Input PPI is compiled using Purchaser's Price since industries purchase inputs from the market.
Pillars of the PPI Framework
- Input PPI: Measures the change in prices of the raw materials, goods, and services that industries purchase to manufacture their final products, for example the cost of steel, rubber, and electricity for a car manufacturer.
- Output PPI: Measures the change in the prices industries receive for the final goods and services they produce, for example the factory price of the finished car.
- Service PPI: Specifically tracks price changes in the service sector, which makes up over 50 percent of India's GDP but was completely ignored by the old WPI. Service PPI Phase 1 covers seven services: banking, securities transactions, insurance, pension fund management, railways, air passenger transport, and telecom.
PPI vs WPI vs CPI: The Three Price Gauges
| Parameter | CPI | WPI | PPI |
|---|---|---|---|
| Measures | Prices paid by consumers | Wholesale prices of goods | Prices received by producers |
| Level | Retail level | Wholesale level | Factory-gate level |
| Services included | Yes | No | Yes |
| Imports covered | Yes | Yes | No (domestic output only) |
| Published by | NSO, MoSPI | OEA, DPIIT | OEA, DPIIT |
| Key use | RBI's inflation targeting | GDP deflator, contract escalation | Supply-side inflation tracking |
| Structure | Single index | Single goods-based index | Input PPI & Output PPI |
Why PPI Captures Producer-Side Inflation Better
- Ramesh Chand's report noted that PPI gives a more accurate measure of price changes from the producer's perspective, improving suitability for National Accounts and GDP compilation.
- Tracking both output and input PPI shows how cost pressure on inputs is passed through to output prices in an industry.
- WPI mixes prices at several points of sale and double-counts, whereas PPI follows the international output and input framework used by advanced economies.
- By including services, PPI reflects a modern, services-heavy economy that the goods-only WPI cannot.
Global Practice and Why the Switch
- The IMF repeatedly flagged a growing need for India to move from WPI to PPI.
- Advanced economies such as the US, UK and Japan rely on a PPI, not a WPI, to gauge producer inflation.
- The Service PPI is being rolled out in phases, with seven services first (banking, securities transaction, insurance, pension-fund management, railways, air passenger, telecom) and the rest later.
- Input PPI is being published experimentally first, so the OEA can test data quality and collect stakeholder feedback before it goes live.
Visual summary
