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What is the base year of the current series of the Wholesale Price Index (WPI) in India?
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Answer: Option A — 2011-12
Detailed Solution
The Wholesale Price Index (WPI) measures the average change in the prices of goods traded in bulk at the wholesale level, that is, in transactions between businesses, before the goods reach consumers. In India, it is compiled and released every month by the Office of the Economic Adviser, under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
The base year of the current WPI series is 2011-12 (= 100). It was revised from 2004-05 in May 2017. The base year is periodically updated so that the index reflects changes in the structure of the economy and in the goods that are commonly traded. Work has been under way to shift the WPI to a newer base year (2022-23).
The WPI basket has 697 items, grouped into three major groups:
- Primary articles (about 22.6% weight): food articles, non-food articles, minerals, crude petroleum and natural gas.
- Fuel and power (about 13.2%).
- Manufactured products (about 64.2%), the largest group.
The WPI includes only goods, not services. It does not reflect the prices paid by consumers, which include retail margins and taxes.
In India, the Consumer Price Index (CPI) is used to measure retail inflation. The CPI (Combined), compiled by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), had a base year of 2012 and includes services such as housing, health and education. Since 2014-15, following the Urjit Patel Committee, the RBI has used CPI (Combined) inflation as the main measure for its monetary policy. Under the flexible inflation targeting framework adopted in 2016, the target is 4% CPI inflation, with a band of 2% to 6%.
Why not the other options?
- ✗2004-05 was the base year of the previous WPI series.
- ✗2012 was the base year of the CPI (Combined) series.
- ✗2015-16 is not the WPI base year; note that the CPI for Industrial Workers (CPI-IW) uses 2016 as its base.
Quick tip
Remember: WPI base = 2011-12 (697 items, by DPIIT, goods only); CPI (Combined) base = 2012 (by NSO), used by the RBI; inflation target = 4% (2-6%); CPI-IW base = 2016.
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Inflation & Price Indices — Preparation
This question tests your understanding of Inflation & Price Indices, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers inflation and deflation, the types and causes of inflation (demand-pull and cost-push), stagflation, the Consumer Price Index (CPI) and Wholesale Price Index (WPI), and the measures used to control inflation. Questions commonly ask which index the RBI uses for its inflation target (CPI combined), who publishes CPI and WPI, and what terms such as stagflation, deflation and disinflation mean. Remember that inflation reduces the purchasing power of money and generally benefits borrowers at the cost of lenders. Practise the inflation and price indices questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.