Currently, retail inflation (consumer price index) includes service sectors as well with data on education, health, tailoring & laundry, transport, communication, recreational services, and also captures the use of services such as cleaners, domestic help and house rent.
After a suggestion by the department for promotion of industry and internal trade (DPIIT), the working group on the revision of WPI, which is headed by Niti Aayog member Ramesh Chand, is currently deliberating the matter in detail.
When contacted, Chand said, “I am in favour of inclusion of services in the WPI. ”
Some members of the working group, however, said that developing a services price inflation index may take time as it is tough to get reliable data for several sectors. “While it is easier to get data for financial services and communications, it willtake time to construct an index for several other services which are not so organised. But we are working towards that since the idea is to ultimately move towards a producer price index,” one of the members said.
Besides, economists are seeking to see how the impact of technological change will play out, especially in sectors related to technology as has been the case with segments such as fintech and even communications.
The government is seeking to revise the base year from 2011-12 for wholesale and retail inflation as well as GDP and other major economic indices. While 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 there is recognition that not moving to 2017-18 as the base year would delay the revision since there was an economic slowdown in 2019-20 and then the next two years were washed out due to the Covid pandemic. In that case, the base year will need to be changed to 2022-23, but that will mean waiting for a few more years. Already, there has been a significant change in consumption patterns over the last decade.
