PHDCCI workshop on new series of WPI

By Staff
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Google Oneindia News

Bhopal, Mar 29: Changes in wholesale prices, both absolute and relative, influence a wide range of economic activities and a constant watch on price movements becomes necessary for operation and regulation of economic policies.

''Wholesale Price Index (WPI) serves as a tool for measuring inflation, changes in credit and fiscal policies by the Reserve Bank of India and the Centre. It serves the business and industry sectors for monitoring price escalation,'' said Dr R N Pandey, Director, Office of the Economic Adviser, Union Ministry of Commerce and Industry, at a PHDCCI-organised workshop on 'New Series of WPI(Base 2000-01) --Collection of Required Data' here yesterday, as per a release.

The meeting was organised under the aegis of a project sponsored by the Office of the Economic Adviser under the Industrial Policy and Promotion department. The purpose was to elicit support of manufacturing units for supply of quality data to the government, which would be used for compiling WPI.

''Wholesale prices, which broadly correspond to producers' prices, represent bulk transactions, generally at an early stage of trading,'' explained Dr Pandey.

The type of data required is weekly price data for the period from the first week of April 2000 to the latest week when the data is supplied. Structural changes taking place in the economy have led to emergence of new products, disappearance of some of the old, changes in quality etc after 1993-94.

''To capture such changes, the base year of the series has to be revised to 2000-01. A working group, under Planning Commission Member Abhijit Sen, is sorting out issues involved and will submit its report by June 2006,'' he added.

Explaining the problems, the expert said it was extremely difficult to obtain price updates every week and, in the absence of price updates for the current week, previous week's prices are repeated and the length of repetition is arbitrary and without statistical basis. ''If the price is not received for a long time, it is declared as unavailable and is estimated by computer on the basis of price trends for the same sub-group. In the absence of any collection machinery and the legal framework for collection of price data, supply becomes voluntary and the entire data is collected through correspondence,'' he informed.

WPI does not include services, which contribute about 50 per cent of gross domestic product and the process of compilation of business service data is already underway.

''As per the new series, number of items to be included will be more than 1,000 in comparison to only 435 in the current series.

The support of industry associations and individual manufacturers in supply of price data will go a long way in releasing a representative WPI by the Centre,'' he added.

Madhya Pradesh Principal Secretary (Industry) O P Rawat, who was chief guest, said in his keynote address that WPI assumes special significance for industry in this era of globalisation where competition is the buzzword for commercial success.

''In fact, WPI helps industry keep track of escalation in input prices and assess production costs in order to stay ahead. Access to a reliable and authentic database is extremely important as it helps in providing a realistic index that will assist in an efficient decision-making process,'' he said.

In his welcome address, PHDCCI President Director Rajendra Kothari hoped that the new series of WPI would serve as a reliable guage of inflation and urged the industry to provide price information to the Office of the Economic Adviser on regular basis for use in compiling the new series of WPI, the release added.

UNI

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