MOSPI to revise CPI base year; floats discussion paper on treatment of PDS items & other free social transfers

The Ministry of Statistics and Programme Implementation (MoSPI) is modifying the Consumer Price Index (CPI) base year by updating CPI weights and baskets, as well as bringing potential changes to the CPI compilation technique, according to an official statement.

MoSPI plans to gather feedback from users, experts, academicians, government organisations, state governments, financial institutions, and the general public on how to treat free PDS items in the Consumer Price Index compilation, the statement said.

The CPI is designed to track changes over time in the general retail prices of a basket of goods and services purchased by households for consumption. This "basket" of goods and services includes items from key categories such as food and beverages, clothing, housing, education, medical care, and transportation etc. The Ministry of Statistics and Programme Implementation
(MoSPI) compiles the CPI for rural, urban, and combined sectors at all-India and state/ UT level.

CPI base year

MoSPI launched the CPI series for rural, urban, and mixed sectors in 2011, starting with 2010 as the base year. The base year serves as a reference point, and the CPI for each month reflects price changes compared to that year. The base year was then changed to 2012.

"The challenge of addressing freely distributed PDS items in the CPI compilation came into focus with the implementation of a new integrated food security scheme under the National Food Security Act (NFSA),” said the ministry, adding that from January 1, 2023, the Central Government initiated this scheme to provide free food grains for one year to beneficiaries under the Antyodaya Anna Yojana (AAY) and Priority Households (PHH) categories.

There are two challenges in the free distribution of PDS items in the context of CPI compilation. These include mid-series adjustments when the price of certain PDS items reduces or increases in an ongoing series as well as inclusion in CPI basket at the start of series and whether the free PDS items be included in the CPI basket. The next issue is free distribution of certain items in PDS for derivation of weights and their inclusion in the CPI basket of the new series of CPI.

CPI for rural, urban and combined sectors, All India Item Index for combined sector and All India and State wise Group/Subgroup indices are released on 12th of every month at 4 PM. In case of holiday on 12th, it is released on the next working day. Compilation of CPI is done in adherence to International guidelines and best practices.