New product coverage, separate solar index under electricity, auction prices for coal, electricity suggested
The government has sought public comments by June 20 on the re-haul of the Wholesale Price Index (WPI) proposed by an inter-Ministerial Working Group, which has suggested expanding the list of products to incorporate items such as medicinal plants, adding solar index as a separate index under electricity and using auction prices for non-coking coal and electricity.
The draft technical report on ‘Revision of Current WPI Series 2011-12 to New Series 2017-18’ put together by the Working Group, headed by NITI Aayog Member Ramesh Chand, also gave its nod to adopting the new base year 2017-18, finalising modalities for State specific WPI and disseminating Business Services Price Index (BSPI) for six services to be merged into the WPI later.
The inclusion of new items and the other changes proposed by the group will lead to a change in the composition of the index with share of primary articles expanding to 24.83 per cent from 22.62 per cent. Share of fuel and power is expected to shrink to 11.24 per cent from 13.15 per cent and manufactured articles to 63.93 per cent from 64.23 per cent.
“The draft report on WPI is being placed in the public domain. Once all stakeholders and interested parties give their comments by the deadline of June 20, the government will take a final decision,” a government official told BusinessLine.
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Other members of the Working Group, constituted by the Ministry of Commerce & Industry, included officials from the National Statistical Office, Ministry of Finance, Department of Agriculture, Ministry of Petroleum and Natural Gas, RBI and SBI Group.
Under agriculture commodities, new items such as medicinal plants like isabgol, aloe vera and menthol; fennel seed and methi seed (spices and condiments), moth (pulses), mushroom (vegetable) and watermelon (fruits) were proposed to be added in new series subject to availability of data.
Fuel & power, the electricity index of current series, has been bifurcated into hydro and thermal electricity. Thermal electricity has been further divided based on coal and gas based power generating stations. Solar index was also proposed to be added as a separate index under electricity.
The sub-group on conceptual issues, under the working group, suggested that the average tariff/unit value (tariff rate/total power sold) should not be used in price index as the tariff rate is fixed and the solar index is driven by the total power sold, as per the report.
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A suggestion made by the Ministry of Coal to use auction prices along with notified prices of non-coking coal in the new series has been agreed by the working group. It further suggested that auction prices also be considered in case of electricity. Alternative source of data source for minor minerals like Garnet & Sillimanite before dropping the items may also be explored..
For manufacturing items, in a deviation from earlier series, it was decided that the selected items under the pharmaceuticals may be mapped along with 30 categories of the National List of Essential Medicine. Items such as sanitizer, masks, hand gloves, flutes and harmonium may be included while there has been no suggestion made for dropping items yet.
The group further suggested that the BSPI may be disseminated separately for six price indices in the first phase including banking, insurance, securities, telecom and air. Once stability is achieved, the BSPI is to be merged with the WPI. It also proposed that the final modalities of releasing State specific WPI may be worked out in consultation with all concerned State’s Directorate of Economics and Statistics (DES).