'Inflation indices, citizen woes disconnected'

Stating that there is a disconnect between the brunt borne by the common man on account of increase in prices of essential commodities and the price levels indicated by different indices, a parliamentary committee has sought rationalisation of multiple price indices such as  Wholesale Price Index and four kinds of Consumer Price Index (CPI).

 The Standing Committee on Finance headed by BJP leader Yashwant Sinha also favoured a more realistic price index which could accurately reflect the prevailing price situation in all commodities including food.

“The country witnessed a phase recently, when inflation rate was reported negative, even as prices in the market, particularly those of essential food articles including fruits and vegetables, were soaring unchecked. Even the CPIs with a higher weightage of food articles could not faithfully reflect the actual price situation in the retail market,” the committee said in its report in Parliament.

“The Committee, therefore, believed that considering the momentum in the food prices, time was now ripe for a focused Food Price Index (FPI) index exclusively for essential food items like rice, wheat, cereals, pulses, sugar, edible oils and vegetables which could accurately reflect the prevailing price situation in these commodities.

Inflation in the country is measured on wholesale price index which has only 15 per cent weightage for food. It obviously does not truly reflect increases in food prices. The Consumer Price Index with 46 per cent is a better indicator but it does not take into account changes in the prices of goods and services consumed by the entire rural and urban population.

The committee also recommended release of the inflation indices by a single nodal agency.

At present, there were multiple agencies involved in the collection, compilation and release of various indices.

While CPI for Industrial Workers, Agricultural Labourers and Rural Labourers are compiled and released by the Labour Bureau in the Ministry of Labour, the fourth index, namely CPI for Urban Non-Manual Employees (CPI-UNME) is compiled and released by the Central Statistical Organisation (CSO) in the Ministry of Statistics and Programme Implementation.

The Wholesale Price Index (WPI), on the other hand, is compiled by the office of Economic Adviser in the Ministry of Commerce and Industry.

“With a view to rationalising the compilation and release of the various indices, the government should consider entrusting the job of coordinating and releasing of indices to a single nodal agency, preferably the Ministry of Statistics and Programme Implementation, which already had the professional expertise required for this purpose.”