New series WPI, IIP reflective of market realities, says India Inc

The new base year 2011-12 for calculating key macroeconomic indicators will provide a more realistic picture and reflect market realities, India Inc said on Friday, even as the new series of data showed decline in both inflation for April and IIP growth for March. The government on Friday released the new series of wholesale inflation and industrial output data under which the the base year for calculating the macroeconomic indicators has been revised to 2011-12, from the 2004-05 earlier. Inflation based on the wholesale price index (WPI) slipped to a four-month low of 3.85 percent in April as both food articles and manufactured items showed cooling in prices, whereas industrial output growth slipped to 2.7 percent in March, mainly on account of poor performance of manufacturing sector, showed the latest data. [caption id=“attachment_3326534” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] The index of industrial production (IIP) growth was 5.5 percent in March 2016. “From now on the IIP data would have a more realistic coverage and be reflective of the market realities which would be useful for tracking economic activity. The switch to a new base is a culmination of a sustained effort to align the data with the new GDP series,” CII Director General Chandrajit Banerjee said. Retail inflation also fell sharply to 2.99 percent in April, from 3.89 percent in March, due to lower cost of food items, including pulses and vegetables, that showed a deflationary trend. The consumer price index (CPI) based retail inflation for March 2017 was revised slightly upwards to 3.89 percent, from 3.81 percent recorded previously. “The release of new WPI data on the 2011-12 base makes it more comparable with the CPI which has 2012 as the base. Both CPI and WPI have declined in April, indicating a benign inflation scenario,” said Banerjee. Ficci Secretary General A Didar Singh said the new series of WPI is more contemporary as it broadens the scope of commodities covered under the main sub segments. “The latest monsoon forecast by Indian Meteorological Department reports normal rainfall this year, which is expected to provide further respite (in prices),” Singh said. Industry body Assocham urged policy makers to take corrective action to address the situation of rising interest rates coupled with the twin balance sheet problems in India, limited capacity of private sector to invest and existing unutilised capacity of industries to produce. “These two indices are now measuring inflation and industrial production with reference to a closer time and closer to real situation,” Chief Economist at India Ratings and Research Devendra Kumar Pant said on the new base year for IIP and WPI.