Roadmap for PPI Shift

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The Ramesh Chand Panel will oversee the transition to PPI, offering a more accurate measure of inflation.

The government has established an expert panel led by NITI Aayog member Ramesh Chand to guide the transition to the Producer Price Index (PPI). The panel's tasks include revising the Wholesale Price Index's (WPI) base year from 2011-12 to 2022-23, aiming to improve the accuracy of factory-gate inflation measurements. It will also propose an updated commodity basket for both WPI and PPI, considering the country's economic changes.

Additionally, efforts are being made to revise the base year for GDP estimation from 2011-12 to 2022-23, following a similar update in 2015, when the base year was changed from 2004-05. Initially, both WPI and PPI will run together until PPI becomes more established.

The shift to PPI is driven by its ability to measure the price changes that producers receive, excluding indirect taxes, and addressing the multiple counting biases found in WPI. While WPI covers only goods, PPI includes services as well, offering a more comprehensive view. All major global economies, including the US, China, and Japan, use PPI to track domestic price changes, making it a more reliable indicator for national income deflators.