This story is from May 1, 2008

Price index to become more realistic

TNN / May 1, 2008, 00:55 IST

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Government is working not only to revamp the existing wholesale price index (WPI) to make it more realistic.

NEW DELHI: Government is working not only to revamp the existing wholesale price index (WPI) to make it more realistic, but will also start releasing the actual prices of all the commodities from May to enable ordinary people to connect with figures.
A senior government official said from next month, government would also release actual price quotations on a monthly basis."In May, we will release prices of April so that prices are in the public domain." This, he said, would enable the common man to relate directly with the price scenario.
To make WPI more realistic, the official said the services sector tariffs like railway, airlines fares, hospital charges and others will also be included. He said that 50% of country��s economy is constituted of service sector. Therefore, its tariff must get reflected in WPI. At present, service sector has been included in the consumer price index, but not in WPI.
The new index will be comprised of 980 items, more than twice the present number at 435. The base year for calculating WPI will also be changed from 1993-04 to 2004-05. "The coverage of the new series has been rationalised by incorporating new items, dropping unimportant items and amalgamating similar items," the official said.

WPI would gradually be phased out and replaced with service price index and Producer Price Index (PPI), the official said. PPI captures the price movements at producers�� level. It measures both input prices paid by producers and the output price that they receive on produced items. It would not include taxes and exports, but imports would be taken into account.
The increase in number of items would largely include items from the manufacturing sector, which has a weightage of over 63% in the present WPI. Price quotations would also go up from the existing 1,918 to 6,000, giving a better picture of the price variation.

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