The government today released the new series of WPI and IIP with new base year of 2011-12, a long pending demand of the economists and experts.
Explaining the rationale behind the revisions, the government said in a press release that the periodical reviews and revisions of the base year of the macroeconomic indicators is a regular exercise and is aimed at capturing the structural changes in the economy and improving the quality, coverage and representativeness of the indices.
Here is an all you need to know about the new series of data:
In the revised series, WPI will continue to constitute three major groups namely primary articles, fuel & power and manufactured products.
Below see the highlights of the changes introduced:
1) Updated item basket and weighting structure conforming to the structure of economy in 2011-12.
2) Increase in number of items from 676 to 697. In all 199 new items have been added and 146 old items have been dropped.
3) According to the press release, the new series is more representative with increase in number of quotations from 5,482 to 8,331, an increase by 2849 quotations (52 percent).
The new features of the series are as follows:
1) In the new series of WPI, prices used for compilation do not include indirect taxes in order to remove impact of fiscal policy. This is in consonance with international practices and will make the new WPI conceptually closer to ‘Producer Price Index’, the government said.
2) A new “WPI Food Index” will be compiled to capture the rate of inflation in food items.
3) Seasonality of fruits and vegetables has been updated to account for more months as these are now available for longer duration.
4) Item level aggregates for new WPI are compiled using geometric mean (GM) following international best practice and as is currently used for compilation of All India CPI.
5) The government has also set up a high-level technical review committee for dynamic review in order to keep pace with the changing structure of the economy.
1) A high-level panel had firmed up the methodology for the IIP with new base year of 2011-12.
2) To facilitate a dynamic revision of the item list of products and the panel of factories, a technical review committee has been set up. The committee will be chaired by secretary, ministry of statistics & programme implementation. According to the govenrment release, the committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost its relevance in the industrial sector or are no longer being produced.
3) The new IIP series has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups), where 149 new items have been added and 124 items have been deleted from the 2004-05 series. The earlier series had 620 items (397 item groups) in the manufacturing sector.
4) Here's the sectoral composition of the new IIP series:
|Sector||Base year 2011-12||Base year 2004-05|
|Weights (%)||Item groups||Weights (%)||Item groups|
5) The growth rates of the old and new series are not strictly comparable, the government press release said.
6) In the new series, there has been an increase in number of factories in panel for reporting data and closed ones have been removed.
7) The electricity sector now includes data from renewable energy sources. The coverage of the mining sector has undergone a change on account of the MCDR Amendment Rules, 2016.
8) The number of source agencies reporting data for compilation of IIP in the new series will be 14 as compared to 15 in the current series. This is on account of the fact that data on ‘Iodised Salt’ in the new series will be provided by the Department of Industrial Policy and Promotion (DIPP).
Updated Date: May 12, 2017 18:37 PM