Ministry of Commerce and Industry

Department of Industrial Policy and Promotion

Office of Economic Adviser

RELEASE OF NEW SERIES OF WHOLESALE PRICE INDEX

12th May, 2017
Frequently Asked Questions on Revision of Wholesale Price Index (Base 2011-12)
Index
S.no Contents Page No.
I. Salient Features of new WPI 4-5
1. What is Wholesale Price Index? 4
2. What is the purpose of revision of WPI 4
series?
3. What are the new features of Wholesale 4-5
Price Index with base 2011-12?
II. FAQs related to weights 5-8
4. What are the changes in weights, number 5-6
of items and quotations at the major group
level between WPI (2011-12) and WPI
(2004-05)?
5. What is the basis of assignment of weights 6
in WPI (base 2011-12)?
6. What is the reason behind a significant
increase of about 2.5% in the weight of 6
Primary Articles in the WPI (2011-12)?
7. What is the reason behind a decrease in
weight of Fuel & Power group in the WPI 7
(2011-12)?
8. Why has the weight of Manufactured 7-8
Product group decreased?
9. Why are the weights of major groups in 8
WPI at variance with their share in GDP?

1
III. FAQs related to items basket 9-13
10. What is the change in the coverage of 9
items in WPI (base 2011-12)?
11. What are the major changes in the item 9-10
basket of the Primary Articles?
12. What are the major changes in the item 10-11
basket of Fuel & Power?
13. What are the major changes in the item 11-13
basket of the Manufactured Products?
IV. FAQs related to quotations 13-14
14. What is the reason behind a substantial
increase in the number of quotations for 13-14
Fuel & Power in the new series of WPI?
V. FAQs related to methodology 14-15
15. What is the change in the method of
compilation of item level indices in WPI
14
(Base 2011-12)?
16. Why is the indirect tax not been included
14-15
in the compilation of WPI in the new
series?
VI. FAQs related to trends 15-16
17. How does the inflation estimates based on 15-16
the new series of WPI (2011-12) compare
with the WPI (2004-05)?
FAQs related to divergence between WPI and
VII. 16-17
CPI
18. What explains the divergence between
WPI and CPI? 16-17

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VIII. FAQs related to other issues 17-21
19. What is the significance of new WPI Food 17
Index in WPI (Base 2011-12) series and
how it has been estimated?
20. What are the main uses of WPI? 17-18
21. What is Producer Price Index (PPI)? 18
22. How is PPI different from WPI? 18
23. How is PPI different from Consumer 19
Price Index (CPI)?
24. What is the composition and Terms of 19-20
Reference of Technical Review Committee
(TRC)?
25. What are the Term of References of the 21
Working Group for the revision of the
current series of Wholesale Price Index?
26. What Sub-Groups were formed under the
Working Group for the revision of the 21
Wholesale Price Index
Annexure 1 22-23
 Comparative statement on the weights of WPI
22-23
(2004-05) and WPI(2011-12)

3
 Frequently Asked Questions (FAQs) on new series of Wholesale
Price Index (Base: 2011-12=100)
Q1. What is Wholesale Price Index?
Ans. Wholesale Price Index (WPI) measures the average change in the prices of
commodities for bulk sale at the level of early stage of transactions. The
index basket of the WPI covers commodities falling under the three
Major Groups namely Primary Articles, Fuel and Power and
Manufactured products. The prices tracked are ex- factory price for
manufactured products, agri-market (mandi) price for agricultural
commodities and ex-mines prices for minerals. Weights given to each
commodity covered in the WPI basket is based on the value of
production adjusted for net imports. WPI basket does not cover services.

Q2. What is the purpose of revision of WPI series?

Ans. On account of the structural changes over time in the economy, products
and their specification are changing even faster. Under the fixed basket
approach the base year is changed at regular intervals. Simultaneously
index basket weights and source agencies are also updated to keep the
index series representative. So far, six revisions have taken place
introducing the new base year, viz. 1952-53, 1961-62, 1970-71, 1981-82,
1993-94 and 2004-05.The current revision is the seventh since its regular
introduction. The current revision of WPI is based on the
recommendations of Working Group constituted under the chairmanship
of Late Dr. Saumitra Chaudhuri, Ex Member, erstwhile Planning
Commission which submitted its report in March 2014.

Q3. What are the new features of Wholesale Price Index with base 2011-12?
Ans. In the new WPI series significant improvement in concept, coverage and
methodology has been made. In the revised WPI basket, the number of
items has been increased from 676 to 697. Efforts have been made to

4
 enhance the number of quotations from 5482 to 8331. The increase in
number of quotations has been done across the major groups to ensure
comprehensive coverage and representativeness. New definition of
wholesale price index does not include taxes in order to remove impact of
fiscal policy. This also brings new WPI series closer to Producer Price
Index and is in consonance with the global practices. The item level
indices are being compiled based on statistically robust Geometric mean
as compared to Arithmetic mean used in the WPI 2004-05 series. Further
for the first time a Technical Review Committee has been set up to
recommend appropriate methodological intervention to continuously
improve coverage, quality and timeliness of the WPI. The new series also
present separate ‘WPI Food Index’ which along with CPI Food Price
Index published by CSO would help monitor the food inflation
effectively.

Q4. What are the changes in weights, number of items and quotations at
the major group level between WPI (2011-12) and WPI (2004-05)?
Ans. Due to changes in the structure of the economy overtime, the weights of
various groups/sub-groups and items also changes to reflect their relative
importance. The revised weights in the new WPI basket reflect the
structure of the economy in the base year i.e. 2011-12. In the revised WPI
basket the weight of Primary Articles group has increased from 20.1 per
cent to 22.6 per cent, whereas the weight of Fuel and Power group has
declined from 14.9 per cent to 13.2 per cent. The weight of Manufactured
products has declined marginally from 64.9 per cent to 64.2 per cent.
Following table shows the comparison of weights, number of products
and number of quotations between 2004-05 and 2011-12 series.

5
 Table 1
Major Group/ Group Weights No. of Items No. of Quotations
2004-05 2011-12 2004-05 2011-12 2004-05 2011-12
ALL COMMODITIES 100.00 100.00 676 697 5482 8331
PRIMARY ARTICLES 20.12 22.62 102 117 579 983
FUEL&POWER 14.91 13.15 19 16 72 442
MANUFACTURED
64.97 64.23 555 564 4831 6906
PRODUCTS

Q5. What is the basis of assignment of weights in WPI (base 2011-12)?

Ans. The weight of an item in the revised WPI basket is based on the net traded
value of the item in the base year i.e. 2011-12. The net traded value is the
value of output of the item in the year 2011-12 adjusted for net imports.
Thus, net traded value represents the total transactions of each product in
the economy during the base year. However the weight assigned to crude
petroleum is based on the value of domestic production only as crude
petroleum is not directly traded in the market and its derivatives
(petroleum products) are assigned due weight based on net traded value.

Q6. What is the reason behind a significant increase of about 2.5% in the
weight of Primary Articles in the WPI (2011-12)?

Ans. The weight of the Primary Article has increased from 20.1 % in WPI
(2004-05) to 22.6% in WPI (2011-12). This increase is primarily attributed
to the increase in the weight of “Crude Petroleum” from 0.90% in 2004-05
series to 1.94% in 2011-12 series and addition of one new item “Natural
gas” with 0.46% weight. It may be noted that the average price of crude oil
(Indian basket) was at peak in 2011-12.

6
Q7. What is the reason behind a decrease in weight of Fuel & Power
group in the WPI (2011-12)?

Ans. The decline in the weight of Fuel & Power from 14.9% in 2004-05 to
13.1% reflects the Group’s relative importance in the overall WPI basket.

Q8. Why has the weight of Manufactured Product group decreased?

Ans. The weight of manufactured products has marginally decreased from 64.9%
in WPI (2004-05) to 64.2% in WPI (2011-12). There has however been a
rearrangement of weights across the 22 (2-digit) groups in the new series
(2011-12) vis-à-vis current series (2004-05). The 12 (2-digit) groups in
2004-05 now correspond to 22 (2-digit) groups in 2011-12.

 In the 2004-05 series, Manufacture of textiles had a weight of 7.33%. This

has now been bifurcated into 2 sub-groups in 2011-12 namely
Manufacture of Textiles and Manufacture of Wearing Apparel. The
combined weight of these groups is 5.69% in 2011-12 series. The decrease
in this Group’s weight is due to some items which were earlier classified
under textile such as polyester staple fibre, viscose staple fibre, viscose staple fibre
and acrylic fibre have now been put under the chemical group given their
widespread applicability, not restricted to textile sector.
 In 2004-05 series all Chemicals, Chemical product, Pharmaceuticals and
Medicinal items were categorized under the Chemicals & Chemical
Products group. However, in the new series a new 2 digit group titled
Manufacture of Pharmaceuticals, Medicinal, and Chemical & Botanical
products has been introduced. Accordingly, the weight of Chemicals &
Chemical Products in 2004-05 series (12.02%) has been split into 2 new
groups namely, Manufacture of Chemicals & Chemical Products and
Manufacture of Pharmaceuticals, Medicinal, Chemical & Botanical
products. The combined weight of both the Groups is 8.46% in WPI
7
 (2011-12) series. The fall in the combined weight is mainly due to deletion
of certain items from the group like Acid (Inorganic), Alumina & Aluminium
Salt, Sodium Salt, Titanium Dioxide etc.

Q9. Why are the weights of major groups in WPI at variance with their
share in GDP?

Ans. The Wholesale Price Index (WPI) is an index covering prices of

products/commodities only pertaining to four sectors comprising
agriculture, mining, manufacturing and electricity. The other sectors of
GDP, in particular, services sector are not covered under WPI. The share
of these four sectors in GDP at current prices in 2011-12 was 41.4%. The
weighting diagram of WPI is not drawn on the basis of gross value added
which is a concept followed in GDP. The WPI weights are derived on the
basis of turnover or value of output adjusted for net imports. The ratio of
gross value added to value of output differs significantly in the sectors
covered under WPI.

8
 Q10. What is the change in the coverage of items in WPI (base 2011-12)?

Ans. In the revised WPI basket, total of 199 new items have been added and 146
items have been deleted. In all 498 items are common between the 2004 -
05and 2011-12 series. The details of number of items and price quotations
have been provided in the table in the next page.
Table 2
Weight No. of Items No. of Quotations
New
Major Dropped/
2004-05 2011-12 2004-05 2011-12 Common added/ 2004-05 2011-12
Groups/Groups Revised
revised
All 498(85.78 146 199
100.00 100.00 676 697 5482 8331
Commodities %)* (11.97%) # (14.22%)*
Primary Articles 20.12 22.62 102 117 92 9 25 579 983
Fuel and Power 14.91 13.15 19 16 15 2 1 72 442
Manufactured
64.97 64.23 555 564 391 135 173 4831 6906
Products
* Weight of the items corresponds to 2011-12 series. # Weight of the items corresponds to 2004-05 series

Q11. What are the major changes in the item basket of the Primary
Articles?

Ans. Following table illustrates the changes in the item basket of Primary Articles.

Table 3
PRIMARY New Items Added in WPI (2011-12) Items deleted from WPI
ARTICLES item basket (2004-05) item basket
(A). FOOD Peas/Chawali , Rajma added under pulses -
ARTICLES Radish, Carrot, Cucumber, Pointed gourd, -
Bitter gourd, Bottle gourd, Beans, Pumpkin and
Drumstick under Vegetables
Mosambi (Sweet Orange), Pomegranate, -
Amla, Jackfruit, Pear Almond, and
Walnut under Fruits
Tamarind under Condiment and Spices -
Betel Leaves under Other Food Articles -
(B).NON-FOOD Industrial wood under Other Non-Food Logs & Timber from Other
ARTICLES Articles Non-Food Articles

9
(C). MINERALS Copper Concentrate and Lead Copper Ore, Gypsum from
Concentrate under Metallic Minerals Metallic Minerals
Garnet under Other Minerals Kaolin, Dolomite, Magnesite,
Barytes, Steatite, Graphite
from Other Minerals
(D).CRUDE Natural Gas -
PETROLEUM &
NATURAL GAS

 The seasonality chart of the Fruits and Vegetables Sub Group under the
Food Articles has been updated in the new series. Prices of seasonal fruits
and vegetables will be available for longer period. For example, tomato
price index will now be available around the year as against eight months in
the current series of WPI (base 2004-05). Cauliflower was earlier available
only for six months but now it will be available for eight month in year.

Q12. What are the major changes in the item basket of Fuel & Power?

Ans. The Fuel and Power group has been updated with significant changes
made in number of items and price quotations. To compile Non-Coking
Coal index, price quotations have been trifurcated into the following
categories as separate items based on grades, to take into account the wide
variation in the prices of different grades benchmarked on the basis of
Gross Calorific Value (GCV).

 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.]

Similarly, improvement has been made by compiling electricity price index

based on prices prevailing at bulk transactions level. Under 2004-05 series,
price of electricity for WPI was measured based on retail tariff applicable

10
 to usage in different sectors such as agriculture, industry, domestic,
commercial, and railways. This was not capturing the price of electricity at
point of bulk sale. In the new series, monthly average rate of sale of power
of 49 selected generating stations from Central, State and private sectors
covering Hydro and Thermal sectors to distributors has been used as
relevant price of electricity. The changes in the items under the Fuel and
Power group are given in Table 4.

Table 4
New Items Added in
Items deleted from WPI
II FUEL & POWER WPI (2011-12) item
(2004-05) item basket
basket
(A). COAL - Coke
(B). MINERAL OILS Petroleum Coke Light Diesel Oil
(C) ELECTRICITY Electricity Electricity (Domestic)
Electricity (Commercial)
Electricity (Agricultural)
Electricity (Railways Traction)
Electricity (Industry)

Q13. What are the major changes in the item basket of the Manufactured
Products?

Ans. A reclassification of the following Manufactured Products groups at 2-digit

level has been done following National Industrial Classification (NIC) 2008
in the WPI (Base 2011-12) series.

11
 Table 5
S. No. WPI (Base 2004-05) WPI (Base 2011-12)
1 Manufacture of Food 1. Manufacture of Food Products
Products
2 Manufacture of Beverage, 2. Manufacture of Beverages
tobacco and tobacco 3. Manufacture of Tobacco
3 products
Manufacture of Textiles 4. Products
Manufacture of Textiles
5. Manufacture of Wearing Apparel
4 Manufacture of Leather 6. Manufacture of Leather and
and Leather Products Leather Related Products
5 Manufacture of Wood 7. Manufacture of Wood and of
&Wood Product Product of Wood and Cork
6 Manufacture of Paper and 8. Manufacture of Paper and paper
paper products Products
9. Manufacture of Printing and
Reproduction of Recorded Media
7 Manufacture of Chemical 10. Manufacture of Chemicals and
and chemical products Chemical Products
11. Manufacture of Pharmaceuticals,
Medicinal Chemical and
Botanical Products
8 Manufacture of Rubber and 12. Manufacture of Rubber and
Plastic Product Plastic Products
9 Manufacture of Non- 13. Manufacture of Other Non-
Metallic Mineral Products Metallic Mineral Products
10 Manufacture of Basic 14. Manufacture of Basic Metals
metal , alloys and metal 15. Manufacture of Fabricated Metal
products Products, except Machinery and
Equipment

12
 11 Manufacture of Machinery 16. Manufacture of Computer,
Electronic and Optical Products
and machine tools
17. Manufacture of Electrical
Equipment
18. Manufacture of Machinery and
Equipment
12 Manufacture of Transport 19. Manufacture of Motor Vehicles,
equipment & parts Trailers and Semi-Trailers
20. Manufacture of Other Transport
Equipment
- 21. Manufacture of Furniture
22. Other Manufacturing

Q14. What is the reason behind a substantial increase in the number of

quotations for Fuel & Power in the new series of WPI?

Ans. The number of quotations for Fuel & Power has increased from 72 in WPI
(2004-05) to 442 in WPI (2011-12) as per the details given below:

Coal: In new series, pithead run of mine notified prices for both regulated
and unregulated sectors from all mines and for all grades is being used.
This change has increased the number of quotations for coal from 20 in
current series to 127 in new series.

 Electricity: There is a change in the definition of prices for computation

of price index for electricity from considering use based retail prices in the
WPI (2004-05) to using average rate of sale of power of selected
generating stations in the new series WPI (2011-12).
There is a substantial increase in number of quotations from 5 in 2004-05
series to 49 in new series covering Hydro and Thermal (coal and gas)
based power plants.

13
  Mineral Oil: Number of quotations under mineral oil has increased from
47 in current series to 266 in new series due to increased coverage of
refineries and varieties.

Q15. What is the change in the method of compilation of item level

indices in WPI (Base 2011-12)?

Ans. In the new WPI series (2011-12), elementary price index (i.e. at the item
level) has been computed using the geometric mean of the price relatives,
which is statistically robust, as opposed to the practice of taking arithmetic
mean of price relatives in 2004-05 series. The formula geometric mean is
used for calculation of elementary indices by CSO in its CPI series. The
change is also in tune with the international best practices. Prior to
independence, the WPI was computed using Geometric Mean. The
weighted arithmetic mean was adopted in preference to weighted
geometric mean since independence with increase in number of
commodities and consequent computational complexities.

Q16. Why is the indirect tax not been included in the compilation of WPI
in the new series?

Ans. A significant change in the new series of WPI has been the exclusion of
indirect taxes while compiling indices of manufactured products. The
Working Group for revision of WPI had recommended that taxes should
not figure in this measure so that price signals emerging from production
side of the economy are not influenced by the fiscal policy.

 Excluding indirect taxes brings the new series of WPI conceptually closer
to the concept of output Producer Price Index (PPI). PPI reflects the

14
 change in average prices that producers get. This is also in keeping with
the international best practices.
 The exclusion of indirect taxes would also ensure the continuity and
compatibility of new WPI series as and when Goods and Services Tax
(GST) is introduced.
 WPI is used as a deflator for nominal macroeconomic aggregates like
GDP and Index of Industrial Production (IIP). Since the nominal
estimates of GVA for different sectors are computed at basic price
exclusive of taxes on products taxes, excluding indirect taxes from WPI
makes it a compatible and appropriate deflator.

Q17. How does the inflation estimates based on the new series of WPI
(2011-12) compare with the WPI (2004-05)?

Ans. The inflation for “All Commodities” in the new series of WPI (2011-12) is
in general lower than 2004-05 series due to shift to latest base year. The
minor variation in rate of inflation estimates can be attributed to the
changes in weighting structure, increase in number of quotations, inclusion
of new items and exclusion of obsolete items, exclusion of indirect taxes
and use of geometric mean instead of arithmetic mean in the new series.

The slight variation in the trend of inflation estimates of Fuel and Power
Group based on the two series are due to significant increase in number
of quotations in the new series, taking electricity prices at bulk transaction
level rather than at retail level, variation in item level weights etc. the steep
rise in inflation estimates of Fuel and Power Group from January 2017
onwards has been due to spurt in global crude oil prices in comparison to
the corresponding months of 2016 and revision of coking coal prices in
January 2017 after a long period.

15
 The inflation estimates of Manufactured Products Group under the new
series by and large are closely aligned to the 2004-05 series. The marginal
variation in the month to month inflation estimates can be attributed due
to the exclusion of indirect taxes, reclassification of product groups at
2-digit level and variation in weights in textiles, chemicals and basic metals.

Q18. What explains the divergence between WPI and CPI?

Ans. WPI reflects the change in average prices for bulk sale of commodities at the
first stage of transaction while CPI reflects the average change in prices at
retail level paid by the consumer. Major difference is the underlying data
used for the derivation of weights of the items retained in the two index
baskets. The weights of the WPI are based on production values whereas
the weights of the CPI basket are based on the average household
expenditure taken from the Consumer expenditure survey conducted in the
base year The prices used for compilation of WPI are collected at ex-factory
level for manufactured products, at ex-mine level for mineral products and
mandi level for agricultural products. In contrast, retail prices applicable to
consumers and collected from various markets are used to compile CPI.

 The reasons for the divergence between the two indices can also be partly
attributed to the difference in the weight of food group in the two baskets.
CPI Food group has a weight of 39.1 per cent as compared to the
combined weight of 24.4 per cent (Food articles and Manufactured Food
products) in WPI basket. Similarly weights of the major petroleum
products such as petroleum and HSD also vary significantly.
 The CPI basket consists of services like housing, education, medical care,
recreation etc. which are not part of WPI basket. A significant proportion
of WPI item basket represents manufacturing inputs and intermediate
goods like minerals, basic metals, machinery etc. whose prices are

16
 influenced by global factors but these are not directly consumed by the
households and are not part of the CPI item basket. Thus even significant
price rise or decline in items included in WPI basket need not necessarily
translate into CPI in the short run. The rise or fall in prices at wholesale
level spills over to the retail level after a lag.
 Similarly, the movement in prices of non-tradable items included in the
CPI basket widens the gap between WPI and CPI. The relative price
trends of tradable vis-a-vis non-tradable is an important explanatory factor
for divergence in the two indices in the short term.

Q19. What is the significance of new “WPI Food Index” in WPI (Base
2011-12) series and how it has been estimated?

Ans. The WPI Food index is compiled by taking the aggregate of WPI for
Food Products under Manufacture Products and Food Articles under
Primary Article using weighted arithmetic mean. Indices for Food Articles
and Food Products were being released separately in WPI (2004-05) as
well. The combined index number of WPI Food indices together with the
Consumer Food Price Index published by CSO, would help monitor the
food inflation effectively.

Q20. What are the main uses of WPI?

Ans. The main uses of WPI are the following:

a) Provides estimates of inflation at the wholesale transactions level for the

economy as a whole. This helps in timely intervention by the Government
to check inflation, in particular inflation in essential commodities, before
the price increase spills over to retail prices.

17
 b) WPI is used as deflator for many sectors of the economy for estimating
GDP by CSO. It is also used to deflate nominal values of production in
high frequency IIP.
c) WPI is also used for indexation by users in business contracts.
d) Global investors also track WPI as one of the key macro indicators for
their investment decisions.

Q21. What is Producer Price Index (PPI)?

Ans. Producer Price Index (PPI) measures the average change in the price of
goods and services either as they leave the place of production, called
output PPI or as they enter the production process, called input PPI.

Q22. How is PPI different from WPI?

Ans. PPI is different from WPI on following grounds:

 WPI captures the price changes at the point of bulk transactions and may
include some taxes levied and distribution costs up to the stage of
wholesale transactions. PPI measures the average change in prices
received by the producer and excludes indirect taxes.
 Weights of items in WPI are based on net traded value whereas in PPI
weights are derived from Supply Use Table.
 PPI removes the multiple counting biases inherent in WPI. PPIs can be
compiled separately for Out PPIs, Input PPIs and Export and Import
PPIs. In build Stage of Processing indices can be compiles to avoid
multiple counting.
 WPI does not cover services and whereas PPI includes services.

18
Q23. How is PPI different from Consumer Price Index (CPI)?

Ans. PPI is different from CPI on following grounds:

• PPI estimates the change in average prices that a producer receives while
CPI measures the change in average prices that a consumer pays. The
prices received by the producers differ from the prices paid by the
consumers on account of various factors such as taxes, trade and transport
margin, distribution cost etc..

• Weights of items in CPI are derived from Consumer Expenditure Surveys

whereas for PPI it is calculated on the basis of Supply Use Table.

• CPI based inflation estimates are used as nominal anchor for Monetary
Policy formulation in general, whereas PPI estimates are used as deflators
and for indexation of contracts etc.

Q24. What is the composition and Terms of Reference of Technical Review

Committee (TRC)?

Ans. Economies undergo structural changes over time. Products and their
specification both in terms of quality and technology are changing even
faster. This makes it increasingly difficult to obtain the price information of
selected products for a fixed number of quotations over a longer period of
time. Further an implicit disadvantage of Laspeyre’s formula used for
compiling the WPI is that the indices with fixed weighting diagram fail to
capture the dynamic changes in product mix and structure of the economy
over time. In order to address important technical issues such as
substitution of source of data, change in specification of products and other
data/methodological issues which require continuous process of review on
a dynamic basis so that the new WPI series remains relevant during the life
of the series, an institutional mechanism has been established through

19
 creation of Technical Review Committee (TRC) chaired by Secretary,
Department of Industrial Policy & Promotion.

The composition of TRC is as follows:

1. Secretary, D/o Industrial Policy and Promotion (DIPP) Chairman

2. Secretary, M/o Statistics and Programme Implementation Member
3. Chief Economic Adviser, Ministry of Finance Member
4. Principal Economic Adviser, DIPP Member
5. Economic Adviser, DIPP Member Secretary

The function of TRC will be as follows:

 Reviewing periodically the list of products in the item basket of WPI and
suggesting methodology for inclusion of new important items in and
exclusion of outdated items from the existing basket as and when warranted
 Reviewing periodically the panel of factories for compilation of WPI and
suggest methodology for including new representative units that emerged
after the roll out of the series in the existing panel, along with suggesting
adjustment of the back series.
 The Committee will also consider cases of closed units during the currency
of the base year and recommend the methodology for replacing such units
by new ones.
 Reviewing periodically the items in the item basket that exhibit
extraordinarily high increase/ decline in index during the currency of a fixed
base year and propose normalization methodology.
 Suggest methodology for adjusting prices of items with frequently changing
specification.
 Recommending appropriate methodological intervention to improve
coverage, quality and timeliness of the WPI.

20
Q25. What are the Term of References of the Working Group for the
revision of the current series of Wholesale Price Index?

Ans. The Terms of Reference of the Working Group are as follows:-

 To select the most appropriate Base Year for the preparation of a new
official series of Index Numbers of Wholesale Price (WPI), Producers
Price Index (PPI) and Business Service Price Index (BSPI) in India.
 To review commodity basket of the current series of WPI, PPI and BSPI
and suggest additions/ deletions of commodities in the light of structural
changes in the economy witnessed since 2004-05.
 To evolve a suitable system for allocation weight to the various
commodities to be included in the WPI/ PPI/BSPI basket.
 To decide the computational methodology to be adopted for Monthly
WPI/ PPI.
 To suggest methods for ensuring smooth flow of data and also to look into
the possibility of having a single agency for collecting data for Wholesale
Price Index (WPI) and Index of Industrial Production (IIP).
 To suggest any other improvements as may be necessary for enhancing the
reliability of the official series of WPI/PPI/BSPI.

Q26. What Sub-Groups were formed under the Working Group for the
revision of the Wholesale Price Index?

Ans. The following Sub Groups were formed under the Working Group for
revision of Wholesale Price Index:
I. The Subgroup on analytical, conceptual, and computerization related issues
II. The Subgroup on Agricultural Commodities
III. The Subgroup on Mining, Fuel and Power
IV. The Subgroup on manufacturing items basket (organized and unorganized)
V. The Subgroup on Producer Price Index

*************

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 Annexure 1

Comparative statement on the weights of WPI (2004-05) and WPI (2011-12)

Major Groups/Groups 2004-05 2011-12

All Commodities 100 100
Primary Articles 20.118 22.618
Food Articles 14.337 15.256
Non Food Articles 4.258 4.119
Minerals 0.623 0.833
Crude Petroleum & Natural Gas 0.900 2.410
Fuel and Power 14.91 13.152
Coal 2.094 2.138
Mineral Oils 9.364 7.950
Electricity 3.452 3.064
Manufactured Products 64.972 64.230
Manufacture of Food Products 9.974 9.122
Manufacture of Beverages 0.909
1.762
Manufacture of Tobacco Products 0.514
Manufacture of Textiles 4.881
7.326
Manufacture of Wearing Apparel 0.814
Manufacture of Leather and Leather Related
0.835 0.535
Products
Manufacture of Wood and of Product of
0.587 0.772
Wood and Cork
Manufacture of Paper and paper Products 1.113
Manufacture of Printing and Reproduction 2.034
0.676
of Recorded Media
Manufacture of Chemicals and Chemical
6.465
Products
12.018
Manufacture of Pharmaceuticals, Medicinal
1.993
Chemical and Botanical Products

Manufacture of Rubber and Plastic Products 2.987 2.299

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Major Groups/Groups 2004-05 2011-12
Manufacture of Other Non-Metallic Mineral
2.556 3.202
Products
Manufacture of Basic Metals 9.646
Manufacture of Fabricated Metal Products, 10.748
3.155
except Machinery and Equipment
Manufacture of Computer, Electronic and
2.009
Optical Products
Manufacture of Electrical Equipment 8.931 2.930
Manufacture of Machinery and Equipment 4.789
Manufacture of Motor Vehicles, Trailers and
4.969
Semi-Trailers
5.213
Manufacture of Other Transport
1.648
Equipment
Manufacture of Furniture 0.727
Other Manufacturing 1.064

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