Economy Notes: Various Price Indices in India

Continuing the RRB JE Study Plan for upcoming RRB JE CBT 1 and other Competitive exams, read the short notes on "Various Price Indices in India". In many exams, questions are directly asked based on definition and base year of these indices. We hope this article will help you.

Economy Notes: Various Price Indices in India

Price Indices in India

• Various weighted price indices are calculated in India.
• These are-
  1. Wholesale Price Index (WPI)
  2. Old Consumer Price Index
  (a) Consumer Price Index for Industrial Workers (CPI- IW)
  (b) Consumer Price Index for Urban Non- Manual Employees (CPI- UNME)
  (c) Consumer Price Index for Agriculture Labourers (CPI-AL)
  (d) Consumer Price Index for Rural Labourers (CPI- RL)
  3. New Consumer Price Index (Introduced in February 2011)
  (a) CPI (Rural)
  (b) CPI (Urban)
  (c) CPI (Combined)
  4. Consumer Food Price Index
• Till April 2014, the Inflation rate was measured with the help of WPI (Wholesale Price Index).
• Currently, in India inflation rate is measured with the help of Consumer Price Index- combined.

1. Wholesale Price Index-

• It measures the change in the price of commodities traded in the wholesale market.
• It is also known as headline inflation.
• Current base year- 2011-12.
• The index basket of the current series has a total of 697 items (117 items for Primary Articles, 16 items for Fuel & Power and 564 items for Manufactured Products.)
• Published by- Economic Advisor, Ministry of Commerce & Industry.

2. Old Consumer Price Index-

(a) Consumer Price Index for Industrial Workers (CPI- IW)

• It measures the change in the price of commodities consumed by industrial workers.
• Current base year- 2001
• Published by- Labour Bureau
• Consumer Price Index for Urban Non- Manual Employees (CPI- UNME)

• It measures the change in the price of commodities consumed by Non- Manual Employees.
• Published by- CSO (Central Statistics Office, Ministry of Statistics)
• It has been discontinued.

(b) Consumer Price Index for Agriculture Labourers (CPI-AL)

• It measures the change in the price of commodities consumed by agriculture labourers.
• It is a subset of CPI-RL.
• Current base year- 1986-87
• Published by- Labour Bureau
• Used for revising minimum wages

(c) Consumer Price Index for Rural Labourers (CPI- RL)

• It measures the change in the price of commodities consumed by rural labourers (include agriculture labourers, labourers of village and cottage industries).
• Current base year- 1986-87
• Published by- Labour Bureau
• Used for revising minimum wages.

3. New Consumer Price Index (Introduced in February 2011)

(a) CPI (Rural)

• Current base year- 2012
• Published by- CSO (Central Statistics Office, Ministry of Statistics)

(b) CPI (Urban)

• Current base year- 2012
• Published by- CSO

(c) CPI (Combined)

• Current base year- 2012
• Published by- CSO
• Currently, in India inflation rate is measured with the help of Consumer Price Index- combined.

4. Consumer Food Price Index-

• It is a measure of change in retail prices of food items consumed by the people.
• Current base year- 2012
• Published by- CSO

Others

Urjit Patel committee

• The committee was appointed to examine the current monetary policy framework of the Reserve Bank of India.
• Major Recommendations of the committee are-
  (a) CPI range should be between 4 % +/-2 %.
  (b) Repo rate always should be more than CPI.
  (c) Proposed formation of Monetary Policy committee to fix accountability.
  (d) Government to help RBI to achieve set targets.

GDP Deflator

• Used to calculate overall price rise.
• Known as implicit price deflator.
• GDP Deflator= (Nominal GDP/Real GDP) × 100
  Here Real GDP- GDP calculated at constant Price
  Nominal GDP- GDP calculated at current Price
• The GDP deflator is the most accurate because it covers all goods and services produced in the economy. The other indices (WPI and CPI) derive from price quotations for select commodity baskets.
• The government does not use it because GDP deflator data comes quarterly (not weekly/monthly basis).

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