Wednesday, March 16, 2011


One of the most decisive acts of the Government in recent years on Economic front is to introduce the new WPI. Many critics felt that the Government is taking up the project just to keep away from the embarrassment of high rate of inflation .But this is not really true. The old system was getting tired with changing habits of consumers. The government has revamped the way it calculates inflation rate to effectively capture variation in prices in tune with the changing times. A number of new products have been included in the new series of Wholesale Price Index (WPI), while about 200 redundant items have been dropped. The new WPI augurs well for the country and for its citizens.

The new WPI series for August with additional 241 items and change in the base year from 1993-94 to 2004-05 has been released on 14th September 2010. The comparison of old WPI with that new WPI did not bring striking difference though new WPI is little lower than before. It is 8.5% against the inflation rate of 9%. This is not hailed by the industrial workers for they get increased compensation on the basis of consumer’s price index.

In twenty first century every modern middle class House hold uses the consumer items of the like ice-cream, mineral water, flowers, microwave oven, washing machine, gold and silver will be reflected in the new series. While during our youth in Guwahati hardly people sported air conditioners at home. They were hesitant to use ACs in their residential homes because neighborhood habits were frugal. The use of Air conditioners in the parental houses of many in Assam was almost taboo though they could afford it. This environment has changed. The cost of House building has changed. The interior decoration of house is now much more costly compared to cost of the building. With old index it never uses to get reflected.

Over the years even food habits of Assamese people have undergone tremendous change. In most middle class now a day’s red, yellow and green capsicum, baby corn and button mushroom are common. It was unheard in fifties in the kitchen of Assamese household. The use of white oils was unheard. Only mustard oil ruled the kitchen in Assam. These new product must form the core of the food index. This would really keep the changing habits in reckoning so far as consumer’s price index is concerned. We welcome it surely.

The WPI inflation was 9.97% in July. August inflation data released on 14th September was 8.5%. With these items, the WPI will measure a total of 676 items against existing 435. "This would give better picture of the price variation. The weights assigned to commodity baskets such as primary articles, food & fuel and manufactured items have also been slightly tweaked. The number of quotations selected for collecting price data for the above items is 5482, up from 1918 quotations in the old series.

Readymade food, computer stationary, refrigerators, dish antenna, VCD, crude petroleum and computers would also be part of new series. Under primary article group of the new WPI, there would be 102 items against existing 98 while fuel and power category would remain static at 19. There is substantial increase in the number of items in manufactured products. In the new series, there would be 555 items compared to 318 items at the moment.

At the same time, weight of manufactured products would go up to 64.9% compared to 63.7% while primary articles group including food have come down to 20.1% against existing 22.02%.

The system dissemination with weekly release of primary (including food index) and fuel index would continue with the new base. Depending on the relevance of articles in the present economic condition about 200 items have been dropped from the new series, despite modernization of index. All India index does not provide a true picture of inflation in Northeast. In northeast vegetable and fish price are much more than compared to Kolkata, Madras, Kerala and even Chandigargh. The industrial workers are obviously not properly compensated by industrial houses because official consumer price index did not reflect the true inflation level of Northeast. It would be appropriate if a proper weight- age system is devised for calculating inflation rate of Northeast.

Some of the items like type-writers, video cassette recorders (VCRs) etc would not find place in the new series. A Committee of Secretaries in August, 2010 approved the release of new series of WPI with 2004-05 as its base. Inflation had been in double digits for five months till June. Planning Commission deputy chairman Montek Singh Ahluwalia said on Monday inflation would remain high in August but would start declining in subsequent months to reach a level of 6% by December-end.

Some of items included in the new series basket are flowers, lemon and crude petroleum in primary articles.

Items such as ice cream, canned meat, palm oil, ready made/ instant food powder, mineral water, computer stationary and leather products have been included in manufactured products. We welcome the change.


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