New Delhi: The department of industrial policy and promotion (DIPP), part of the ministry of commerce and industry, is going ahead with a plan to start releasing inflation data once a month despite opposition from the central bank and the finance ministry.
The data is currently released once a week.
DIPP, which compiles and releases data on the Wholesale Price Index (WPI), has approached the committee of secretaries (CoS), a key decision-making body comprising top bureaucrats, for this purpose.
“After the CoS clears the proposal, a draft cabinet note will be issued to get a nod from the cabinet for releasing monthly inflation data,” said a DIPP official, who did not wish to be named.
“NSC (National Statistical Commission, the country’s apex statistical body), too, has agreed to change the reporting frequency of WPI inflation to a monthly one. On that basis, we are going to the CoS,” the official added.
NSC falls under the ministry of statistics and programme implementation.
Wholesale inflation is calculated by the increase in WPI.
DIPP’s proposal is based on the recommendations of a working group headed by Planning Commission member and economist Abhijit Sen. The working group submitted an interim report on the issue in May.
A monthly reporting frequency, according to the working group, will increase the accuracy of the data and reduce the extent of variation between the provisional and the final data.
Currently, the government releases weekly inflation data with a two-week lag and then releases the final data with an eight-week lag.
Current headline inflation data is widely considered to be non-representative due to the continued use of an old base year (1993-94) and an outdated basket of commodities.
The working group had, in its report, proposed shifting the base year to 2004-05 and enlarging the product basket to 1,224 items from the current 435.
Minister of commerce and industry Kamal Nath has already endorsed the recommendations of the working group.
While the finance ministry says that reducing the reporting frequency will make timely policy interventions difficult, the Reserve Bank of India is of the view that it would face problems in preparing weekly statistical supplements if inflation data isn’t available with the corresponding frequency.
The DIPP official said that the department is looking at releasing the new series by November, once it gets the necessary approvals.
“We have received data for the agriculture and fuel groups. Test run for these items is on. We have started receiving data for manufacturing products. We expect that the new series will be ready for launch by November this year,” the official added.