To seek comments via discussion papers before new CPI inflation series in Feb: MoSPI Secretary | Business News

Edited excerpts:

The market survey for CPI was conducted in 2024. But with GST rates being cut in September this year, does the base become artificially high? Has there been an assessment of the impact of the GST cuts on CPI inflation?

The impact of the GST cut will have a one-time impact on the CPI (Consumer Price Index) and that will get reflected in the inflation numbers whenever they are released. In any case, the CPI is always compared to the previous year (to calculate inflation) — it’s the incremental rise (that matters). When these kinds of changes happen, the impact is captured in CPI as per price changes in the markets. It’s a one-time impact and then they (CPI) keep fluctuating up and down.

There are many estimates floating around regarding the impact on consumption from the GST cuts. Is there anything that MoSPI is doing to assess how consumption is rising?

So, we’ll have the IIP (Index of Industrial Production) coming out — if consumption is rising, there should be some impact on production. Obviously, there could be (drawdown of) inventories so it may not be immediate. But, no, we are not doing any analysis of household consumption because it varies due to various reasons, apart from price, like festivals, etc.. And I think a lot of the retailers themselves are doing this.

But this should reflect in the GDP data for the July-September and October-December quarters?

Yes.

We are only three months or so away from the release of the revised CPI inflation series. Have the weights for items been finalised?

They’re working on it. We’ll be releasing discussion papers. We want comments from stakeholders.

So, before the new inflation print under the revised CPI series is released for the first time in February 2026, will you disclose the weights beforehand in the discussion paper?

We have to take a call on what all we will give in the discussion paper before the release of the revised series. I don’t want to preempt the work that is being done by the team. But there will be conferences — data-user conferences will be held in Delhi, Mumbai, and Chennai during November-January because it’s necessary that people understand (the changes and the methodology). Otherwise, unnecessarily, there will be doubts.

Has a final resolution been reached for the treatment of goods provided for free under the Public Distribution System (PDS) in the revamped inflation basket?

We put that out in the public domain and asked for comments. We’ve also given what our methodology is going to be. So, once we get the comments, then we’ll take a final view on that.

What is the discussion paper exactly for? Let’s say you get some comments as feedback. But then you will have very little time left until the release of the new CPI series.

Of course, but these days everything is computerised. A lot of the work has already been done on things like how to weigh the PDS items. In fact, we’ve had discussions with the IMF (International Monetary Fund) and other experts; we have had closed-door meetings. So we have a fair idea of what will happen. But we just wanted it to be transparently put out there for anyone to comment. So, if you have an issue, please tell us what the issue is. We have suggested that this is what we are going to do.

You had earlier mentioned that the Household Consumption Expenditure Survey will be done every three years. Has the year for the next round been decided?

It will be done in 2027-28. It is going to be every three years.

The discussion papers that you will release for inflation will incorporate the changes to the CPI basket and the treatment of PDS items too?

Yes, it will have the final stance. We may not give the exact weights of each item in the paper, but we will say that this is the methodology, this is what is going to be done so that everyone understands what we are doing.

In a data conference a few months ago, there was an entire session on scraping of websites for price data, especially e-commerce websites. Will data scraping be used in the new CPI series as part of the price collection process?

Whatever we do, we will do it legally. See, there is some amount of data scraping which can be done without keeping the owner of that website informed. But whatever we do, it will be done after informing that we are doing this because data scraping is very easy to block. If you do it once, they can just block it and that doesn’t help us.

I don’t want to comment on which data, but we are going to use e-commerce and online data. But which websites and methods – some people say that you scrape it from our website, we will allow you; some people say they prefer giving it to us rather than us scraping. Either way, we’ll see what is to be done, but we will be keeping them in the loop. Whoever’s website we use, we’ll keep them in the loop that we are picking their data.

In a column with the Chief Economic Advisor in September, you had mentioned that the revised GDP series might do away with single deflation for manufacturing. Is that happening?

The exact work is going on sector by sector where both on the input and the output side we have price availability and indices. So, it may not be 100 per cent, it may be 90 per cent or 95 percent. I don’t want to commit on the exact percentage.

The point I was trying to make was that when we say other countries are doing double deflation, we should understand how much double deflation they are doing. We have asked the IMF, we have asked the UN statistical system if they have any data, and none of them has been able to provide information. So it’s not as if everyone is using the producer price index (PPI) completely or double deflation completely. What we are saying is that we will be at the same level as is being done internationally.

In services, in any case, double deflation doesn’t make sense. Agriculture, we anyway are doing it where we have input (prices). In industry, we will be completing more sectors and wherever required, as per the international practice.

Will there be use of the PPI then?

Let’s see. That is another work in progress, whether the Department for Promotion of Industry and Internal Trade will be able to do it by December or they might be able to give us some tentative figures. We are hoping to be able to get something.

The difference between the Wholesale Price Index and the PPI are the taxes and some amount of the logistics costs because PPI is at the factory gate and WPI is wholesale (prices). So what we were trying to say is that in many cases, the WPI may not be very different from the PPI, depending on the product, sector, type of industry, etc.

Do you see a resolution to the issues that have been pointed out, about real growth being higher than expected while nominal growth has been weaker than anticipated?

Economic forecasting is difficult, and it becomes even harder due to uncertainty prevailing in the international scenario. Our figures are based on the actual data. Also, methodology continues to remain the same in the current series of GDP.

The assumption that people are making that we used only one figure to deflate nominal GDP is blatantly wrong. We look at sector-wise indices of CPI, WPI — in many cases we have the real prices. People saying that we use a 60:40 ratio of WPI and CPI to deflate nominal GDP to arrive at real GDP is wrong.

We’ve looked at it internationally also and they all follow a similar process. Somewhere they have slightly better data, somewhere they have less data. It’s not that we do it blindly — what is the overall CPI and overall WPI — and then do it.

Has there been any assessment of whether the elimination of the third revised estimate of GDP data has been helpful?

There was no additional information being given by our indices. What data sources were there in the first or second (revised estimates of GDP), there was no additional value addition in the third. The differences will happen in case we have used some estimates for which the values were not available and then in the third estimate it comes. But we were anyway getting more than 99 per cent. In any case, things have changed now that the data collection methodologies have improved. The time gap between the end of the financial year and getting that has reduced. So, in any case, it required a change.

Will there be further streamlining?

The (advisory) group (on GDP) is working on seeing what additional changes (are possible). It might very well be that there is no scope for further reduction. But, I won’t want to commit either way as of now.

Technology has been increasingly adopted in data collection. Are there any other significant changes in the pipeline with respect to technology given the ongoing expansion in the number of surveys?

One is technology and the other are the questionnaires themselves — that we are giving a lot more focus because the questions impact the length of the survey and how much time is taken. So how to reduce the time taken to survey and how to ask questions so that we don’t ask the same question twice because then you’re wasting time. And also to look at what information or data is needed, so that that question is asked. This is not technology related, but it is perhaps equally important to look at.