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New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) has issued a draft technical report of a working group which suggests revising wholesale price index base year from 2011-12 to 2017-18 and proposes addition of about 480 new items such as medicinal plants, pen drive, lifts, gymnasium equipment, and certain motorcycle engines in the new series.

Revising base year to 2017-18 for computation of wholesale inflation would help in presenting a more realistic picture of the price situation in the country, the report has suggested.

“It is recommended that the draft report may be placed in the public domain for wider consultations with stakeholders,” the draft report said.

In the case of agriculture commodities, new items such as medicinal plants like Isabgol, Aloe Vera and Menthol; fennel seed and Methi seed, Mushroom and Watermelon were proposed to be added in the new series subject to availability of data.

Currently, the index has a total of 697 items, including primary articles (117), fuel and power (16) and manufactured products (564).

In the new series, a total of 1,176 items in these three categories have been proposed – primary articles (131), fuel and power (19) and manufactured products (1,026).

“No items have been dropped at this stage. The items of the current series would be dropped only after consultation with the stakeholders,” it added.

The report also said that in the current series of WPI, the electricity index is computed based on the price quotations of power generating stations only from hydro and thermal power stations.

Now it is proposed to build three indices – hydro, thermal and solar electricity index. Thermal electricity is further bifurcated into thermal coal and gas.

“WPI revision is a periodic exercise. The current revision process of WPI considering base year 2017-18 has been undertaken to incorporate the structural changes in the economy,” the report said.

Two major indices are used currently for tracking price movement — Wholesale Price Index (WPI) and Consumer Price Index (CPI).

While the wholesale price index (WPI) measures the price movement of goods in wholesale markets, the CPI tracks inflation at the retail level and also includes certain services.

A working group for the revision of WPI was set up under the Chairmanship of Prof. Ramesh Chand, Member, NITI Aayog on June 25, 2019 with the mandate to revise the base year from 2011-12 to 2017-18. Based on the recommendations of the group, five subgroups have been constituted on agricultural items; mining, fuel and power; manufacturing; services; and analytical and conceptual issues.

Further, the report has also talked about developing a separate price index for the service sector.

As per the sub-group recommendation, the robust service price indices for Banking, Insurance, Securities, Telecom, Railway freight, Air and Port services may be published as final indices,” it said.

A sub-group on service sector has recommended to compile all service price indices at the base year 2017-18 on quarterly basis, except the banking sector which would be a monthly as well as quarterly.

The group has recommended that BSPI (Business Service Price Index )-Telecom Index may be compiled on chain base method and mobile wireless services from the major telecom companies may be segregated into different representative validity-based categories to collect price data.

“IRDAI may examine the proposed new pricing methodology for compilation of life insurance and non-life insurance service price index,” it said.

It added that in phase-II of compilation of BSPI, the possibility of including other services such as Trade and Road Freight Services, Hotel (Short term accommodation), Storage (Warehouse), Publishing and broadcasting services (Advertisement), Information and computer-related services and Professional, scientific and technical services may be explored.