Need of New Series and Analysis

This move was long overdue as it will bring all the key macroeconomic indicators—IIP, WPI, CPI (Consumer Price Index), national accounts—on a common base of 2011-12, making the comparisons easier. The old series being used has become obsolete, part of the basket is no longer in consumption, many of the contemporary products are not being covered by it and many products are under weighed. Analysts believe that the series with a new base year would be more comprehensive in nature.

However, analysts believe that though the new series will be able to capture the current state of affairs of the economy by replacing the old basket of goods with a contemporary one, but it will still not be able to reduce the volatility in the indices.

Nevertheless, it must be said that volatility in itself is mostly a real life problem and not a statistical problem. If it’s a real life problem then data should capture and change in base year will not make much difference. Further, it is believed that the new basket of goods would bridge some kind of gap which persists between the WPI and CPI numbers.