Context
India has revised its major industrial and price indices to reflect changing production patterns, evolving consumption behaviour, technological advancements, and the growing role of services and renewable energy. The reforms include updates to the Index of Industrial Production (IIP), Consumer Price Index (CPI), and Wholesale Price Index (WPI), along with the introduction of the Producer Price Index (PPI). The objective is to improve the accuracy of economic data and align India’s statistical framework with global best practices.
Index of Industrial Production (IIP)
The Index of Industrial Production (IIP), which measures industrial output and serves as an important input for GDP and GVA estimation, has been revised with 2022–23 as the new base year.
Key changes include:
- Expansion of coverage to include gas supply, water supply, sewerage, and waste management activities, providing a more comprehensive assessment of industrial activity.
- Greater granularity through separate tracking of renewable and non-renewable electricity generation and different categories of mineral production.
- Broader product and sectoral representation, enabling the index to better capture the evolving structure of the industrial economy.
Consumer Price Index (CPI)
The Consumer Price Index (CPI), India’s primary measure of retail inflation, has been updated with 2024 as the new base year.
Major revisions include:
- Adoption of expenditure weights based on the Household Consumption Expenditure Survey (HCES) 2023–24, ensuring that the index reflects contemporary consumption patterns.
- Inclusion of emerging expenditure categories such as digital streaming services, rural house rent, CNG, and PNG.
- Improved coverage of transport and communication-related services.
- Removal of obsolete products that no longer constitute a significant component of household expenditure.
These changes enhance the CPI’s ability to measure changes in the cost of living more accurately.
Wholesale Price Index (WPI)
The Wholesale Price Index (WPI) has been rebased to 2022–23 to improve the measurement of producer-level price movements.
Key reforms include:
- Expansion of the commodity basket to better represent current production and trade patterns.
- Rationalisation of commodity classification to improve consistency and economic relevance. For instance, crude petroleum and natural gas have been shifted to the Fuel and Power category, reflecting their close association with the energy sector.
Producer Price Index (PPI)
In June 2026, the government introduced the Producer Price Index (PPI) as a comprehensive measure of producer-level inflation.
Its salient features are:
- Separate measurement of input costs incurred by producers and output prices received by them.
- Exclusion of indirect taxes and transportation costs, providing a clearer picture of underlying price movements.
- Coverage of both goods and services, making it broader in scope than the WPI.
The PPI is expected to serve as an early indicator of inflationary pressures and strengthen monetary, fiscal, and industrial policy analysis.
Transition to a New Inflation Framework
The government has indicated that the WPI will be phased out gradually over the next five years, with the CPI and PPI emerging as the principal measures of inflation. This transition is expected to bring India’s price measurement framework closer to internationally accepted statistical practices.
Conclusion
The revision of the IIP, CPI, and WPI, along with the introduction of the PPI, marks a significant step towards modernising India’s statistical system. By better capturing changes in production, consumption, and pricing patterns, these reforms enhance the reliability of economic data and support evidence-based policymaking. Their long-term success, however, will depend on regular methodological updates, robust data collection, and sustained statistical transparency and credibility.
