Govt likely to launch Producer Price Index soon, govt sources say
Informist, Friday, Mar 1, 2024
--Govt sources:To retain WPI even after launch of Producer Price Index
--Govt sources:Pilot Producer Price Index based only on output price
--Govt sources:Ready with pilot Producer Price Index with FY18 as base
--Govt sources:Aim to launch Producer Price Index FY25, preferably Apr
--Govt sources: PMO keen to launch Producer Price Index quickly
--Govt sources: May soon launch Producer Price Index
By Krity Ambey, Shubham Rana and Sagar Sen
NEW DELHI – The government is likely to launch a Producer Price Index, preferably as early as April, two officials in the statistics ministry said. The Department for Promotion of Industry and Internal Trade is ready with the pilot of the index, the officials said.
"In fact, the Prime Minister's Office wants to introduce it in the next fiscal year, in April if possible," one of the two officials told Informist.
The industry department has prepared the Producer Price Index with 2017-18 as the base year for the index, but they need to make certain modifications to it, said the official quoted above. "This one includes index for output prices only. It does not include PPI (Producer Price Index) for input prices or PPI for services, we have asked them to add these as early as possible."
The government will continue to publish the Wholesale Price Index even after the introduction of the Producer Price Index, a second official said. The National Statistical Office will also continue to use the WPI as a deflator to calculate GDP, the second official said. "MOSPI (Ministry of Statistics & Programme Implementation) cannot use this model of PPI (as GDP deflator) because it does not include index for input prices," the first official said.
The Producer Price Index, which measures the average change in the price a producer receives for his goods and services sold, has replaced the Wholesale Price Index in most countries. Informist reported in November that the government is looking to replace the WPI with a Producer Price Index. The Producer Price Index is considered a more reliable index to measure inflation at the producer level, compared to the WPI, which measures inflation at the wholesale level.
The WPI measures the average change in the wholesale prices of goods and is primarily used as a GDP deflator in India. The current series of WPI was adopted in 2017 with 2011-12 as the base year. On the other hand, a producer price index measures the average price change received by the product manufacturer or service supplier and excludes indirect taxes. It also accounts for services, which the WPI does not. However, the pilot index prepared by the industry department does not include services or input prices.
The working group, constituted by the government in 2019 for the revision of WPI, suggested moving to Producer Price from WPI. A government working group had submitted a report on Producer Price Index in 2017. End
