A new Wholesale Price Index (WPI) series with 2022-23 as base year is expected to be released in a couple of months and will be adopted in the new Gross Domestic Product (GDP) series, Ministry of Statistics and Programme Implementation (MoSPI) Secretary Saurabh Garg told FE.
“As the base revision of WPI and Producer Price Index (PPI) is in progress, the existing WPI (Base:2011-12) is used as a deflator in concerned sectors of the revised GDP estimates. Once PPI becomes available, it will be adopted in the revised series of GDP (Base: 2022-23),” Garg said.
When will MoSPI release update GDP data?
The MoSPI will release GDP data with a 2022-23 base year for FY23, FY24, FY25 and advance estimates for FY26 along with GDP data for Q3 FY26 and revised data for Q1 and Q2 under the new series on Friday. According to a FE poll of 10 economists, GDP grew around 7.35% in Q3.
The new series will incorporate methodological refinements, expanded data sources, and enhanced price deflation techniques.
Amid concerns from economists over using the outdated 2011-12 base year for WPI in the new GDP series, Garg said there will be only a marginal impact from using the existing WPI series in the new GDP series. The MoSPI will now use nearly 600 items from the new CPI and the existing WPI series to deflate the output in new GDP series, the secretary said. It used to have 180 deflators earlier.
What did Saurabh Garg say?
“Even in the past series, not all constant price estimates were based on CPI or WPI. For example, in the case of agriculture both quantity and prices are available, so no index is needed to adjust the values. In some cases, volume extrapolation was used such as for electricity, gas, transport, telecommunications and some sub sectors of financial services.
In such cases, volume indicators like the index of electricity generated and sale of gas, cargo handled, minutes of call and data usage were mostly used instead of WPI and CPI,” Garg said.
In manufacturing, Garg said, WPI was used at the sub-category level and the same will now be used for double deflation at the item level whereby both inputs and outputs of different types of manufacturing will be deflated separately.
According to analysts, the old WPI series can distort real GDP estimates by failing to capture recent shifts in price structures, product composition and weighting, potentially causing divergences between nominal and real GDP growth. India’s GDP growth for FY26 estimated at 7.4% under the old series, against a growth rate of 6.5% in FY25. The nominal GDP is estimated to grow 8% in FY26.
The secretary further said that in cases where single deflation was being used, volume extrapolation will now be used. “For example, trade and transport margin weighted WPI will be used as a deflator for the trade sector, relevant CPI will be used for services like education, health, recreation etc. In these cases, only the deflation strategy has changed (from single deflation to single extrapolation) though the indicator remains the same,” he said. Garg added that in some cases like hotels and restaurants, CPI will now be used instead of WPI and for financial services CPI (General) will replace the implicit price deflator.
The MoSPI secretary said that double deflation is adopted in the manufacturing sector in addition to the agriculture sector in the new series. “It is found that manufacturing is characterized by a high intensity of intermediate consumption (raw materials, energy) and usually significant volatility is observed in cost of input-output items,” he said.
Application of the double deflator will lead to improved accuracy of Gross Value Added (GVA) estimates for the manufacturing sector in the new series, he said. Under the double deflation approach, output and intermediate inputs are separately adjusted for price changes using concerned price indices.