A new wholesale price index series with updated product portfolio is likely to be ready in another three months.
National Sample Survey Organisation, a division within the ministry of statistics, has been roped in to collect price data for the new series and a dry run is on the anvil in the next couple of months.
The new series will have 2004-05 as the base year, as against 1993-94 in the present mode and will reflect a consumption basket that is relevant in today's scenario, thereby making inflation data more reliable.
Government officials said the Department of Industrial Production and Planning would push for release of the inflation data on a monthly basis, against the current practice of doing it on a weekly basis.
"The decision in this regard is yet to be taken," the official added. A proposal on the same was sent to the Union Cabinet in February 2009 for its in-principle approval. But since the data series on WPI was not fully ready, no decision was taken. "Dry run of the system is expected in about three months," the official said.
DIPP acts as the nodal agency for compiling and disseminating the WPI data. It will present the status on the new WPI series to a working group headed by Planning Commission member Abhijit Sen on May 8.
The new data series will have a little more than 1,000 items, against 435 in the current mechanism.
Price data are expected to be collected from 5,000-6,000 points of production, as against nearly 2,000 at the moment. "Originally, DIPP had proposed to cover more items. But after subsequent analysis, the number was reduced," the official said.
NSSO to compile data: The new data series will see NSSO compiling the data on behalf of the industry department. Currently, most of the price data are sent to DIPP by the manufacturing units, while petroleum and agriculture ministries contribute information on items like farm and food products, and petroleum products.
The proposed revision in the WPI is expected to give a better snapshot of the wholesale price movement in the economy. DIPP believes that monthly dissemination of inflation data will give a better idea about prices. Moreover, with the collection mechanism being fine-tuned, more accurate data are expected to be collected, leading to lesser difference in initial and final numbers.
Even if the monthly system of releasing inflation data are approved, price data will be collected on a weekly basis by NSSO.
About 227 people are being recruited by NSSO to collect the data from all parts of the country. The cost for the exercise in the first year is likely to be around Rs 3 crore (Rs 30 million).
The weights of various segments of the WPI are also being finalised, and will be discussed at the working group meeting. Technical evaluation of the new series will be done by the Planning Commission and Central Statistical Organisation. After this, the proposal to introduce the new system will be sent to the Cabinet, which will take the final call on the matter.
Inflation has been on an a downward curve since mid-2008 due to falling commodity prices as well as high base effect. In the week ended April 22, the WPI-based inflation rate stood at 0.26 per cent, against 7.95 per cent in the year-ago week.
