Currently, retail inflation (consumer price index) includes the service sectors, as well as data on education, health, tailoring and laundry, transportation, communications, recreation, and also captures the use of services such as housekeeping, help household and rental of houses.
After a suggestion from the department for the promotion of industry and internal trade (DPIIT), the working group on the revision of art WPIwhich belongs to Niti Aayog member Ramesh Chandis currently deliberating on the matter in detail.
When contacted, Chand said: “I am in favor of including services in the WPI. ”
Some members of the working group, however, said that developing a service price inflation index could take time as it is difficult to obtain reliable data for several sectors. “While it is easier to obtain data for financial services and communications, it will take time to build an index for many other services that are not as organized. But we are working towards that as the idea is to ultimately move to a producer price index, “said one member.
Additionally, economists are looking to see how the impact of technological change will play out, especially in technology-related sectors, as has been the case with segments such as fintech and even communications.
The government is looking to revise the 2011-12 base year for wholesale and retail inflation, as well as for GDP and other important economic indices. Although the plan was to move to 2017-18 as the base year, there are several economists who argue for a more recent base year.
At the same time, it is recognized that not moving to 2017-18 as a base year would delay the review as an economic slowdown occurred in 2019-20 and therefore the next two years have been faded due to the Covid pandemic. If so, the base year will need to be changed to 2022-23, but that will mean waiting a few more years. There has already been a significant shift in consumption patterns over the past decade.
