In order to modernise India's inflation and pricing data framework and align it with global best practices, the government has decided to gradually phase out the Wholesale Price Index (WPI) and replace it with a comprehensive Producer Price Index (PPI) system covering output, input and services prices.
As part of the transition, WPI and the new PPI series will be released simultaneously for five years, giving businesses, industries and policymakers sufficient time to adjust.
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The government noted that WPI continues to be extensively used in contracts and price-escalation clauses, necessitating a gradual shift rather than an immediate replacement.
The new framework will feature both Output PPI and Input PPI, providing a clearer and more granular picture of price movements across the economy.
Officials said the dual-index approach will help eliminate double counting of items that often occurs in wholesale price measurements and enable better tracking of the relationship between production costs and output prices.
The move is also aimed at bringing India's statistical practices in line with global standards.
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According to officials, PPI is more consistent with the structure of national accounts and will support the adoption of the internationally accepted "double deflation" method, which improves the measurement of real economic growth by separately accounting for changes in input and output prices.
After the five-year transition period, WPI will be discontinued, marking a major shift in the country's inflation and producer-price measurement framework.
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