Ramesh Chand Committee

Source: TH

Context: The Indian government has formed an 18-member expert panel, led by NITI Aayog member Ramesh Chand, to revise the Wholesale Price Index (WPI) and explore a transition to a Producers’ Price Index (PPI).

About Wholesale Price Index (WPI):

• What it is: WPI measures changes in the prices of goods sold and traded in bulk at the wholesale level. It is a key indicator of inflationary trends in the economy.

• Released by: The Office of Economic Advisor, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.

• Aim: Track supply and demand dynamics in industries. Provide a measure of wholesale inflation in the economy. Align with other economic indicators like GDP.

• Track supply and demand dynamics in industries.

• Provide a measure of wholesale inflation in the economy.

• Align with other economic indicators like GDP.

• Key Features: Base Year: Updated to 2011-12 in the current series, under revision to 2022-23. Number of Items: Tracks prices of 697 items, including 117 primary items, 16 fuel and power items, and 564 manufactured products. Excludes: Services sector (unlike CPI, which includes both goods and services).

• Base Year: Updated to 2011-12 in the current series, under revision to 2022-23.

• Number of Items: Tracks prices of 697 items, including 117 primary items, 16 fuel and power items, and 564 manufactured products.

• Excludes: Services sector (unlike CPI, which includes both goods and services).

About Producer Price Index (PPI):

• What it is: The Producer Price Index (PPI) measures the average change in prices received by producers for goods and services, either sold domestically or exported.

• Types: Output PPI: Tracks prices of goods and services as they leave production sites. Input PPI: Monitors prices of goods and services entering production processes.

• Output PPI: Tracks prices of goods and services as they leave production sites.

• Input PPI: Monitors prices of goods and services entering production processes.

• Advantages of PPI Over WPI:

• Industry-Centric Inflation Measurement: Captures price changes from the perspective of producers, providing an early signal of inflation trends. Focus on Production Stages: Reflects price shifts before goods and services reach consumers, aiding better policy decisions. International Alignment: Adheres to the System of National Accounts (SNA), making it more suitable for global economic comparisons. Broader Scope: Includes services, unlike WPI, which is restricted to goods. Global Adoption: Has replaced WPI in many countries as a more precise tool for measuring economic activity.

• Industry-Centric Inflation Measurement: Captures price changes from the perspective of producers, providing an early signal of inflation trends.

• Focus on Production Stages: Reflects price shifts before goods and services reach consumers, aiding better policy decisions.

• International Alignment: Adheres to the System of National Accounts (SNA), making it more suitable for global economic comparisons.

• Broader Scope: Includes services, unlike WPI, which is restricted to goods.

• Global Adoption: Has replaced WPI in many countries as a more precise tool for measuring economic activity.

Insta links:

• Producer-price-index