India’s inflation gauge is preparing for an overahul, shedding relics of the past as most Indians have made smartphones, streaming and app-based services a part of their lives.
On February 12, when the Ministry of Statistics and Programme Implementation releases the new consumer price index (CPI) series to replace the 2012 base, several items such as VCR and DVD players, torch light, audio cassettes, radio and sewing machine will exit the basket, with some seeing lower weights, Times of India's Shiva Rajora reported.
In their place, a set of new items will enter the CPI series with a 2024 base, reflecting how consumption patterns have shifted over the years. Smartphones, over-the-top (OTT) platforms, eating out, app-based transportation services, quick commerce and house rent in rural areas, among others, will be added, an official told TOI.
However, free food items such as wheat and rice distributed through the public distribution system (PDS) to nearly 80 crore people will not be included in the new CPI basket. The decision was taken by the 22-member technical advisory panel responsible for updating the base year of price indices, which chose to follow global practice, ToI reported.
“Internationally, the norm is to not include free priced food, goods or service items. It was decided that we should not deviate from international norms. In other countries, free items constitute only 5-10% of the consumption basket, while in India free items are provided to a very large population,” an official told TOI.
The official added that free food items were also excluded in the existing CPI framework. “In the existing CPI series, only subsidised food items are included in the basket. The completely free items are not included, and they won't be included under the new series as well. The suggestions that we got pointed to the distortionary impact on the inflation figures, as free items will likely show a low inflation,” the official said.
The decision follows prolonged discussions within the statistics ministry over recent years on whether free food items should be included in the revised CPI series. Earlier, the ministry had released two discussion papers examining the issue.
The debate gained prominence after the Centre rolled out the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in January 2023, under which free food grains are provided to nearly 75% of the rural population and 50% of the urban population.
Economist Arun Kumar said excluding free PDS food items meant the inflation number would not reflect the complete picture. “A weighted average could have been arrived to include both market prices and PDS prices,” he said.
On February 12, when the Ministry of Statistics and Programme Implementation releases the new consumer price index (CPI) series to replace the 2012 base, several items such as VCR and DVD players, torch light, audio cassettes, radio and sewing machine will exit the basket, with some seeing lower weights, Times of India's Shiva Rajora reported.
In their place, a set of new items will enter the CPI series with a 2024 base, reflecting how consumption patterns have shifted over the years. Smartphones, over-the-top (OTT) platforms, eating out, app-based transportation services, quick commerce and house rent in rural areas, among others, will be added, an official told TOI.
However, free food items such as wheat and rice distributed through the public distribution system (PDS) to nearly 80 crore people will not be included in the new CPI basket. The decision was taken by the 22-member technical advisory panel responsible for updating the base year of price indices, which chose to follow global practice, ToI reported.
“Internationally, the norm is to not include free priced food, goods or service items. It was decided that we should not deviate from international norms. In other countries, free items constitute only 5-10% of the consumption basket, while in India free items are provided to a very large population,” an official told TOI.
The official added that free food items were also excluded in the existing CPI framework. “In the existing CPI series, only subsidised food items are included in the basket. The completely free items are not included, and they won't be included under the new series as well. The suggestions that we got pointed to the distortionary impact on the inflation figures, as free items will likely show a low inflation,” the official said.
The decision follows prolonged discussions within the statistics ministry over recent years on whether free food items should be included in the revised CPI series. Earlier, the ministry had released two discussion papers examining the issue.
The debate gained prominence after the Centre rolled out the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in January 2023, under which free food grains are provided to nearly 75% of the rural population and 50% of the urban population.
Economist Arun Kumar said excluding free PDS food items meant the inflation number would not reflect the complete picture. “A weighted average could have been arrived to include both market prices and PDS prices,” he said.
