The Central Statistical Organisation (CSO) has changed the base year for the calculation of the Index of Industrial Production (IIP) as well as the Wholesale Price Index (WPI) from 2004-05 to 2011-12 and as per the new series, April WPI inflation stood at 3.85 percent and March IIP at 2.7 percent .
The Consumer Price Index-based inflation in April stood at 2.99 percent but it is already calculated at 2011-12 base year.
With the change in baseline for the IIP and WPI, the Government is trying to bring in more accuracy and include the latest growth parametres in the level of economic activity. The Central Statistics Office (CSO) has earlier changed the base year for the country's national accounts, including the gross domestic product (GDP) and the gross value addition (GVA). The retail inflation based on the Consumer Price Index (CPI) at the moment is calculated on the base year of 2011-12 already. The CSO and the DIPP moved to the new and recent base year to reflect the new economic changes.
This was a long standing demand for a new series of WPI and IIP so that GDP numbers can be based on more accurate and realistic data as growth has been more pronounced in the last three years. This would help policy makers get a more accurate picture of output and price trend. Under the old series with a base year of 2004-05, the IIP rose by a mere 0.7% in the full year and 2.5% in March.
The base year is revised periodically to capture the changes in the structure and composition of the industry over time due to technological changes, economic reforms and consumption pattern of the people. With the new base year series, the difference between the WPI and CPI will narrow , feel economists.
In the new series, the mining sector will have almost the same weightage (14.4%) as in the old series (14.2%) and manufacturing has a higher weightage at 77.6% up from 75.6%. The weightage of electricity in IIP undert he news series has declined from 10.3% to 8%.
The IIP gives a broad outlook on output of various types of goods like basic, consumer and capital ones, which helps in gauging the level of economic progress and investments in the economy
According to the government press release, the 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 one 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," the release said.
Data released by CSO showed India's retail price inflation fell to a new low of 2.99% in April from a five-month high of 3.89% in March on lower food prices.
DIPP updated the WPI to the new series by assigning revised weights to reflect bter price movements.