The UPA’s “commitment” to rural India notwithstanding, no progress has been made on compiling the Consumer Price Index (Rural). This index is a crucial indicator measuring the impact of price rise in rural India, which has been bearing the brunt of the increasing cost of essential commodities. Despite showing concern over the spiralling prices, the government has made little effort to gauge the real extent of the hit that rural India has taken. In fact, the government has pleaded that it doesn’t have the manpower to compile the index. The UPA, however, will be ready with the new urban consumer price index by May next year. This new index would give a more accurate and harmonised picture of prices in towns and cities. The CPI (Rural) was supposed to have been ready by December 2007. Four months past the deadline, the country’s chief statistician told a parliamentary panel that “no progress could be achieved on compilation of CPI (Rural) due to absence of manpower resources.” This index was to provide a more accurate measure of the average price of consumer goods and services in rural India. It would replace the existing Consumer Price Index for Agricultural and Rural Workers. The parliamentary standing committee on finance headed by BJP leader Ananth Kumar has criticised the government’s tardiness. “Such non-performance reflects poorly on the functioning of the ministry (ministry of statistics and programme implementation). There is always scope for re-distribution of manpower to attend to important work.” In the absence of an index which provides an accurate picture prices change at the level of the consumer, India continues to use the wholesale price index (WPI) to measure inflation. This at a time when most other countries use consumer price indices to ascertain price changes. The WPI can at best only measure headline inflation, and as such it doesn’t provide an accurate estimate of the price rise that consumers face at the retail level. The current WPI is even less representative of the economy as it bases its measurement on just 435 items. For the last three years, the government has been working on an initiative to recast WPI. The reworked index will have a base year of 2004-05, extend to 2,000 products and weightages for constituent items will be reworked.
( Economic Times dated 21 April, 2008 )
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NEW DELHI: As expected, the retail inflation is turning out to be higher than the more widely followed inflation based on Wholesale Price Index (WPI). And worryingly for the government, in the rural India as well. The point-to-point inflation rate based on consumer price index for agricultural labourers (CPI-AL) and rural labourers (CPI-RL) spurted to 7.91% and 7.63%, respectively, in March 2008 from 6.38% and 6.11% during February 2008.Therefore a mechanism should be evolved to guage WPI (Rural ) at the earliest at any cost. For this man power from NSSO may be utilised immediately keeping away the unwanted usual Surveys.
WPI-based inflation reflects only inflation figure based on the WPI understates the actual cost pressure since it does not incorporate retailers’ cost, which is normally higher than wholesalers’ price and the cost incurred on many services on which the consumers spends a major chunk of his earnings every month upward pressure on food prices to supply-side constraints and hardening of prices in international markets. Price have surged significantly in the past one year by 50% to 60% across the world.
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