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Finance minister Pranab Mukherjee said on Friday the wholesale price index series, used to calculate inflation in the country, will have 2004-05 as the base year.
"The WPI series is being upgraded with base year 2004-05 in lieu of the existing one with base year 1993-94," Mukherjee told the Lok Sabha, replying to a queation on price indices.
With the advancement of the base year and probably a revision of commodities in the index and their weights, it is expected that the index would provide a better picture of the current scenario of prices.
"The WPI will now become more representative of today's reality. I believe it will come along with the revision in commodities and weights," rating agency Crisil principal economist DK Joshi said.
Though Joshi said the WPI will become a better measure, he doubted if the government would include services in the index and said people will have to continue depending on other indices like the consumer price index.
"The WPI price data collection completely excludes the services sector," Mukherjee said, replying to whether the current system of collecting data for monitoring prices is faulty.
The finance minister said information on weekly prices of manufactured products is highly meagre.
"In the absence of legal backing for and a dedicated data collection system, the data is received on a voluntary basis from government ministries and attached offices, commodity boards, oil companies, individual industrial units, leading manufacturers, business houses, chambers of commerce and trade associations," Mukherjee said.
He added data collection for the consumer price index (urban) has started.
It may be recalled that the National Statistical Commission, 2001, had recommended that the Central Statistical Organisation compile a single national consumer price index by computing the CPI (Urban) and CPI (Rural) separately and then combining them together into an all-India index.
Image: A shopkeeper sells pulses. | Photographer: Amit Gupta/Reuters