Base Year of Wholesale Price Index Revised from 2011–12 to 2022–23

Why in News?

The Government of India has approved the revision of the Wholesale Price Index (WPI) base year from 2011-12 to 2022-23 and the compilation of new Producer Price Indices (PPIs). The revised series will be released by the Office of Economic Adviser (OEA), DPIIT.

About the Development

• The revision was approved by the competent authority after recommendations from the Technical Advisory Committee (TAC) on Statistics of Price and Cost of Living (SPCL) and review by the National Statistical Commission.
• The new WPI series (Base Year: 2022-23) will replace the existing WPI series based on 2011-12.
• Along with the revised WPI, the government will introduce:
  • Output Producer Price Index (OPPI)
  • Trial Input Producer Price Index (IPPI)
  • Service Producer Price Index (Service PPI)

Services Covered under Service PPI

The Service PPI will initially cover seven services:

• Banking
• Securities Transactions
• Insurance
• Management of Pension Funds
• Railways
• Air Passenger Transport
• Telecommunications

Key Changes in the New WPI Series (2022-23)

• Total commodities in the WPI basket have increased from 697 to 957 items.
• New energy sources such as solar power and wind power have been included under the Electricity group.
• Nuclear electricity has been added to the index basket.
• Crude Petroleum and Natural Gas have been shifted from the Primary Articles category to the Fuel and Power category.
• The revised basket better reflects changes in India’s production and consumption patterns.

Transition from WPI to PPI

• The WPI will continue to be released for five years alongside the new PPIs due to its widespread use in price-escalation clauses in contracts.
• After this transition period, WPI will be discontinued.
• The shift from WPI to PPI aligns India with international best practices followed by advanced economies and recommended by the International Monetary Fund.

Difference between WPI and PPI

Wholesale Price Index (WPI)	Producer Price Index (PPI)
Measures price changes at the wholesale level.	Measures prices received by producers for their output.
Includes taxes and trade margins in some cases.	Focuses on producer-level prices before reaching consumers.
Mainly tracks goods.	Covers goods as well as services.
Less reflective of actual producer costs and revenues.	Provides a more comprehensive measure of producer inflation.

Source: PIB