India to unveil revised WPI (2022–23 base) for new GDP series.
Saurabh Garg says 500–600 CPI–WPI items to improve deflators.
New GDP base year shifts to 2022–23, replacing 2011–12.
Updated indices expected to reduce distortions in real growth estimates.
After CPI Revamp, Govt Eyes WPI Base Year Reset Amid Economists’ Concernspm
MoSPI will now rely on almost 600 items drawn from the updated CPI and the existing WPI basket to deflate output in the new GDP series — a substantial expansion from the roughly 180 deflators used previously
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A revised Wholesale Price Index (WPI) series, using 2022–23 as the new base year, is likely to be unveiled within the next couple of months and will be incorporated into the upcoming Gross Domestic Product (GDP) series, Saurabh Garg, secretary at the Ministry of Statistics and Programme Implementation (MoSPI) told the Financial Express.
India calculates real GDP — which accounts for inflation — by deflating nominal GDP using selected price indices. Economists have long argued that this approach is outdated, as it leans heavily on the WPI, rather than the more widely monitored Consumer Price Index (CPI) that better reflects household-level inflation.
Garg said that now the government will use about 500-600 items from the new CPI and the old WPI series, compared with about 180 earlier, to deflate the output and improve the accuracy of the data.
He also said that this practice will continue until a revised WPI series is released, which is expected shortly.
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Under previous methods, low nominal GDP growth alongside low wholesale inflation created discrepancies by translating into higher real growth rates.
Amid economists’ concerns about retaining the 2011–12 base year for the WPI in the revised GDP calculations, Garg stated the effect of using the current WPI series in the new GDP framework would be minimal.
He explained that the MoSPI will now rely on almost 600 items drawn from the updated CPI and the existing WPI basket to deflate output in the new GDP series — a substantial expansion from the roughly 180 deflators used previously.
Rebase of GDP, Price Indices
India is set to revise its GDP base year from 2011–12 to 2022–23 later this week on February 27. MoSPI already rebased the CPI base year from 2012 to 2024.
However, there was a division among economists on whether the unchanged WPI, compiled by the commerce and industry ministry, base year will distort real growth estimates.
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Many experts have viewed this as the system’s ‘weakest link’, noting that it often diverges from trends captured by the CPI. While the effect on real GDP may be modest because WPI is applied at industry-level detail, the use of outdated weights can still introduce noticeable inconsistencies.
The last major revision took place in 2015 when the of base year of national accounts shifted from 2004-05 to 2011-12.