The Government of India has decided to constitute a Working Group for base revision of the current series of Wholesale Price Index (WPI) from base 2011-12 to 2022-23.

• The panel is  headed by NITI Aayog member Ramesh Chand.

Terms of Reference of the Working Group

• To suggest the commodity basket of WPI and PPI with base year 2022-23 in the light of structural changes in the economy.
• To review the existing system of price collection and suggest changes for improvement.
• To decide on the computational methodology to be adopted for WPI / PPI.
• To examine the methodology for compilation of PPI approved by Technical Advisory Committee on Statistics of Prices & Cost of Living and suggest further improvement in compilation and presentation and recommend a roadmap for switch over from WPI to PPI.
• To examine the method of computing the linking factor adopted so far and suggest  appropriate changes in the method of computing the linking factor, if necessary.
  • To suggest any other improvements as may be necessary for enhancing the reliability of WPI / PPI.

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About Wholesale Price Index

• Wholesale Price Index (WPI) represents the price of goods at a wholesale stage i.e. goods that are sold in bulk and traded between organisations instead of consumers. 
• Released by:  The Economic Advisor in the Ministry of Commerce and Industry. 
• Base year: 2011-12
• WPI covers only goods and excludes the services.
• WPI is primarily used as a GDP deflator. 
• WPI reckons only basic prices and does not include taxes, rebate/trade discounts, transport and other charges.
• Weights given to each commodity covered in the WPI basket are based on  Value of production adjusted for net imports.
• Limitations: 
  • WPI has an inbuilt bias due to double counting of the same product as it doesn’t include exports and imports.
  • It does not account for inflation at the level of the ordinary public because they do not buy products at wholesale prices.
• Components and weightage in WPI basket:
  • Primary Articles (Weight 22.62%)
  • Fuel & Power (Weight 13.15%)
  • Manufactured Products (Weight 64.23%)

About Producer Price Index (PPI)

• Definition:  It is an indicator of average price movement over time in selling prices received by domestic producers of goods and services.
  • PPI also includes services, while WPI only has goods.
• PPI is different from WPI as PPI measures the average change in prices received by producers and excludes indirect taxes.
• PPI looks at inflation from the viewpoint of industry and business and measures price changes before consumers purchase final goods and services.
• Weight of an item in WPI: It is based on net traded value, whereas in PPI weights are retrieved from Supply Use Tables.