Revision of Wholesale Price Index

1. Revision of Wholesale Price Index Department of Industrial Policy and Promotion 12th May 2017

2. Wholesale Price Index • Measure of average change in wholesale price . • First published from the week commencing 10th January 1942 (Base year 1939). • WPI has been revised with base years 1952-53, 1961-62, 1970-71, 1981-82, 1993-94, 2004-05. • Current series of WPI (Base 2004-05) was launched on September 2010 • Seventh revision is with base year 2011-12synchronized with base year of other important indicators such as GDP, IIP etc • New series based on the recommendation of the Working Group chaired by Late Dr. SaumitraChaudhari.

3. Key Concepts • Definition of Wholesale price • Price for bulk sale at the first stage of transaction • Existing formula (WPI Base 2004-05) = Basic Price (ex factory price, ex mine price or mandi price)+ Excise Duty- Trade discount • New Formula (WPI Base 2011-12)= Basic price -Trade Discount • New WPI is not influenced by fiscal policy • Weighting Structure • Shows relative importance of an item in a basket based on its availability in the Indian economy as reflected by Net traded value • Net traded value = Gross Value of Output + Import – Export • Methodology • Compilation of item level indices based on Geometric Mean

4. Comparative Statement of Weights, Number of Items & Number of Quotations

5. WPI with new base year 2011-12 • Item basket consist of 697 items (against 676 in existing base) with following changes Deletion and addition of items is based on their relative importance in the commodity basket

6. Salient features of the new series of WPI Product Basket Primary Articles A. Food Articles • Prices of seasonal fruits and vegetables now available for longer period • 7 new fruits and 9 new vegetables added • New fruits added include Mosambi (Sweet Orange), Pomengranate, Amla, Jackfruit, Pear Almond, and Walnut. • New vegetables added include Radish, Carrot, Cucumber, Pointed gourd, Bitter gourd, Bottle gourd, Beans, Pumpkin and Drumstick. B. Minerals • Newminerals added : Copper Concentrate, Lead Concentrate, and Garnet • Minerals removed : Copper Ore, Graphite, Fireclay, Magnesite , Gypsum, Kaolin, Dolomite, Barytes and Steatite • C. Crude Petroleum and Natural Gas • Natural Gas added because of its increasing importance

7. Salient features of the new series of WPI Fuel & Power • Coal • Trifurcation of Non coking coal (Based on Gross Calorific Value) • Non-Coking Coal G1 to G6 [GCV exceeding 5500 Kcal/kg.] • Non-Coking Coal G7 to G14 [GCV 3100 Kcal/kg. to 5500 Kcal/kg.] • Non-Coking Coal G15 to G17 [GCV < 3100 Kcal/kg.] • Coke deleted from sub group ‘Coal’ of Fuel and Power because of its decreasing importance B. Mineral Oils • Petroleum coke introduced because of its increasing importance • Light Diesel Oil (LDO) dropped because of its decreasing importance • Electricity • 1 item group for Electricity sector • Monthly average rate of sale of power of 49 generating stations from Central, state and private sector covering Hydro and Thermal is used • To reflect the price change at bulk transaction level

8. Salient features of the new series of WPI Manufactured ProductsNew series (2011-12), 22 two digit groups based on NIC classification (2008)Selection of items from the Annual Survey of Industries (ASI) data by covering at least 80 percent of the output of each 2 digit group.

9. New features WPI Food Index • Anew WPI Food index to be compiled on a monthly basis to estimate the WPI based inflation in food items • This index is estimated by taking the aggregate of WPI for Food Products (9.12) and Food Articles (15.26) • The total weight of WPI Food Index will be 24.38 • Effective monitoring of food inflation at wholesale level

10. New features High Level Technical Review Committee has been set up • Committee to review periodically the list of products in the item basket of WPI to keep pace with the dynamic changes in the economy • Committee to suggest methodology for inclusion of new and important items in and exclusion of outdated items from the existing basket as and when warranted. • Committee is to be headed by Secretary, DIPP. Other Members of the Committee are Secretary MoSPI, Chief Economic Adviser, MoFand Principal Adviser DIPP.

11. Data Sources (1 of 2) I. Primary Articles • Directorate of Economics and Statistics, and National Horticulture Board, M/o Agriculture and Farmers Welfare • Tea Board & Coffee Board, Department of Commerce • Directorate of Sugar and Vanaspati, Department of Food, Ministry of Consumer Affairs • East India Cotton Association, Mumbai • Textile Commissioner, Mumbai • Central Silk Board, Bengaluru • National Dairy Development Board, • Rubber Board, Kottayam • Indian Bureau of Mines, Nagpur • Ministry of Petroleum & Natural Gas • Gas Authority of India Ltd

12. Data Sources (2 of 2) II. Fuel & Power • Coal India Ltd, Ministry of Coal • Bharat Petroleum Corporation Ltd • Hindustan Petroleum Corporation Ltd • Indian Oil Corporation Ltd • Mangalore Refinery and Petrochemical Ltd. • Central Electricity Authority III. Manufactured Products (No. of factories increased from 3744 to 5788) • Different Private and Public sector units producing respective goods taken from the Annual Survey of Industries frame. • Directorate of Economics and Statistics (DES), Ministry of Agriculture & Farmers Welfare • Textiles Commissioner • Joint Plant Committee, Ministry of Steel

13. Annual Growth Rates (%)- WPI Major Groups Base 2011-12 vis-à-vis 2004-05

14. Comparison of Inflation Rates (%)- All Commodities

15. Comparison of Inflation Rates (%)-Primary Articles Mar 17

16. Comparison of Inflation Rates (%)- Fuel & Power

17. Comparison of Inflation Rates (%)- Manufactured Products Mar 17

18. Comparison of Food Inflation (%)- (Food Articles and Food Products) Mar 17

19. Trend in overall inflation rate • Lower inflation rates in new base year on account of: • Shifting of base year to a more recent period • Inclusion of new items and exclusion of old ones • Updation of specifications • Increase in number of source agencies for reporting data and exclusion of closed ones

20. Trend in Fuel and Power inflation rate • Overall decline in weight of Fuel and Power • Petroleum Coke added • Light Diesel Oil deleted • Steady increase in Excise duty for mineral oils from 2015 onwards is not taken into account in the WPI (2011-12) • Electricity prices in 2011-12 series capture price for bulk sale by measuring average rate of sale of power by power producers to distributors (in 2004-05 series power tariffs applicable to Domestic, Commercial, Agricultural, Railway and Industry was considered)

21. Trend in Manufactured Products inflation rate • New item basket reflecting the changed structure of the economy • 135 items have been dropped, and 173 new items added • The 391 common items have different weights in 2011-12 series compared to 2004-05 series • New factories have been selected from recent Annual Survey of Industries • Specifications of items relate to more recent varieties

22. The following material is available on the website of Office of Economic Advisor at http://eaindustry.nic.in/ • Press Release for new series of WPI (Base 2011-12) • Press Release of the provisional index for April 2017 • Monthly WPI (Base 2011-12) from April 2012 till April 2017 • Linking factor for linking WPI (Base 2011-12) with WPI (Base 2004-05)

23. Thank You