8.3. Wholesale Price Index (WPI)

Inflation calculated on the basis of Wholesale Price Index is also called as the “headline inflation”. Headline inflation in India is measured in terms of Wholesale Price Index (WPI) and the Office of the Economic Adviser, Department of Industrial Policy & Promotion is entrusted with the task of releasing this index. WPI is an important statistical indicator, as various policy decisions of the Government, like inflation management, monitoring of prices of essential commodities etc., are based on it. Even though WPI was prepared on a weekly basis for a number of decades, India shifted to monthly calculation of the WPI in 2009.

The Government periodically reviews and revises the base year of the macroeconomic indicators as a regular exercise to capture structural changes in the economy and improve the quality, coverage and representativeness of the indices. In this direction, the base year of All- India WPI has been revised from 2004-05 to 2011-12 by the Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry to align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP) and Index of Industrial Production (IIP).

The Wholesale Price Index (WPI) series in India has undergone six revisions in 1952-53, 1961- 62, 1970-71, 1981-82, 1993-94 and 2004-05 so far.

The current series is the seventh revision. The revision entails shifting the base year to 2011- 12 from 2004-05 changing the basket of commodities and assigning new weights to the commodities. It has generally been the practice to undertake the revisions on the advice of a Working Group constituted each time. For the new series with base 2011-12=100, a Working Group was constituted on 19th March 2012 chaired by Late Dr. Saumitra Chaudhuri, Member, erstwhile Planning Commission and comprised most stakeholders.