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Commentary

Very Important Items to be Added in the WPI

Business Standard: Mobiles and Digicams to be added to WPI (HT commenter Bingo)

Over 300 new items such as mobile phones and digital cameras would figure in the new wholesale price index (WPI) that would give a better picture of the price situation.

And close to 30 items would be knocked off from the new inflation series expected to be out by December.

The base year for the new index will be 2004-05 while the WPI is presently calculated on 1993-94 base.

In the trail index, data for 1,100 items are being collected, which would be eventually consolidated to about 700 articles, the official said.

In the existing series, the weight of primary articles is 22.02 per cent while manufactured products contribute 63.75 per cent. The weight of fuel, power, light and lubricants in the index is about 14 per cent.

Besides, the government is working on an index to measure rise in prices in the services sector, which includes telecom, banking and aviation.

Note that apart from this, there’s CPI (Urban) which – the Consumer Price Index – which should reflect prices at the consumer level.

The full technical report is here and isn’t final; it’s open to suggestions.

Some changes I can see: Food is down from 15.40% to 14.34%, a very minor downgrade. Non-food primary articles aer down from 6.14% to 4.26%; this includes items like raw cotton, soyabean, niger seed (!) etc.

Acknowledging the increase of love in India and perhaps the obscenely expensive material on Valentine’s day, there is a new entry for “Rose prices” at 0.15%. Which can only mean that my son is going to have inflation ridden birthdays, having been born on the 14th of Feb.

Crude prices have been introduced as part of the WPI – it was absent. Weightages of Petrol, Diesel and Coke have gone up while electricity had dropped from 5.48% to 3.45%.

Food based manufactured products – Sugar, Maida, Atta etc. – are a mixed bag. Their weight has gone down to about 10% from 11.53%, but we finally see an introduction of refined oils, ice cream (they didn’t have that?) and papads in the index, showing us they have had a fun time creating this index. Also included are roasted cashewnuts, pickles and rice bran extraction, which I am sure you sorely missed.

In James Bond style, there is an entry for “Indian Made Foreign Liquor (Malted, but not Blended)”. In case you’re wondering why that happened, note that the entry for “Blended” was already in there; the Association of Malted (but not Blended) liquors sent their representatives named “GainDa” and “Circuit” who gave the WPI technical committee a very convincing argument, and an offer they couldn’t refuse. Also included is Toddy, meaning that Goa’s popularity is getting recognised.

Our country tends to spin a lot of yarn, so yarn of all varieties is in. (processed, knitted, not knitted, bleached, unbleached, using-fair-and-lovely-but-not-bleached etc.)

There are ton of more products in every sector; on a more serious note these reflect the greater data collection ability more than anything else. It isn’t just the eye-catching headline “mobiles and cameras included” but also the fact that heavy chemicals like propylene (which were absent, but heavily used) are now included. Papers after all want good headlines, so the mobile phone fundas pop right up. Can you even imagine the headline “Guar seed included in WPI”?

To give you an idea of how twisted that headline is: the “handset” or landline telephone was at 0.052%. It is now 0.017%, with the “telephone receiver” added as a new entry at a breathtaking 0.0058%. The allocation to phone equipment has actually gone DOWN. And the digital camera? It takes 0.03%, but air conditioners have a lot more weight at 0.26%. So do solar power systems (0.036%), ball bearings (0.12%), or even what you might describe the headline, the lemon (0.07%). In fact, the whole applicances area seems to have gone from about 6% to 7.2% – nothing significant.

Overally the broad categories are still close by: (Current, New figures)

  • Primary Articles: 22.02% -> 20.12%
  • Fuel: 14.22% -> 14.91%
  • Manufactured Produects: 63.75% -> 64.97%

I like the fact that the index is broader, and while you may find it a tad difficult to believe that Processed Shrimp is given a different allocation from Processed Prawn, the new allocation seems to be indicative of our totally warped lifestyles. There was a time when inflation was about how many goats you could exchange for a loaf of bread. This is certainly not such a time. And by the love of Indian Made Foreign Liquor (Malted, but not Blended), I am thankful for that.