Monthly WPI model to improve manufacturing data collection

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New Delhi: The plan to shift to a monthly release of Wholesale Price Index is aimed at improving data collection for the manufacturing sector, said the government on Monday explaining the change. Weekly data is not adequately available for the sector. The current series has been in existence since January 1942.

“To my mind, this is a sensible move. Even with the best of efforts, there was serious problem with data in the weekly WPI. When I was part of the National Statistical Commission (NSC), we were aware of the problems and had discussed the issue,” said Suresh Tendulkar, former member of National Statistical Commission and ex-chairman, PM’s Economic Advisory Council.

His views were echoed by Sonal Varma, economist at Nomura Bank. She said in the weekly system, the difference between provisional and final data at times was as large as 1%. Markets react to the provisional data. What was needed was data, which was closest to the final estimates.

This is a very good idea and from a government perspective, aligns with global practice. We will not see those frantic data revisions. More importantly, it will give the policy environment some stability. With weekly numbers, there was such a frenzy that gets built up and it used to breed unnecessary hyperactivity. Policy responses need to be acted upon the basis of more robust data point. Abheek Barua, chief economist, HDFC said.

India’s chief statistician Pronab Sen said, “The monthly data would be much more reliable and accurate. The market will be reacting to it much reliably. Needless volatility in the asset market would also stop.”

While the Abhijit Sen-led working group has also suggested shifting the base year to 2004-05 from the current 1993-94, the Cabinet Committee on Economic Affairs (CCEA) did not indicate when the index will be revised. The Cabinet, has also decided to continue with separate weekly release of data on primary articles and goods in fuel, power, light and lubricant group.

“The response (to price change every week) is poor, particularly from the manufacturing sector. On monthly basis, the response is bound to be better, reflecting the true position,” commerce minister Anand Sharma said in the CCEA meeting. The government intends to release the monthly inflation data after November 14, he said.