2.9.1 Changes in the prices of goods and services affect different segments of the population differently. Thus measuring prices and their rate of change over time has become crucial to almost every economic issue, from the conduct of monetary policy to measuring inter-temporal and inter-regional economic progress. Central and State Government agencies collect the primary data on prices for varied purposes. The data on prices, both for the wholesale price index and consumer price indices, are not satisfactory. On account of existing deficiencies, such as involvement of multiple data collection agencies, use of varying concepts and definitions, non-existence of an exclusive field agency, non-standard specifications, repetition of prices due to non-response, and the meagre honorarium to data collectors, the Commission has recommended the unification of the system of price data collection so that the mechanism should take into account the requirements of all Central agencies compiling price indices. This would enhance the reliability and credibility of price data. On the issue of compilation of the Wholesale Price Index (WPI), the Commission has recommended that the revision of base year must be undertaken more frequently so as to capture the changes in industrial structure on account of liberalisation. The Services Sector has presently developed to such an extent now that it contributes significantly to country’s GDP. On account of the non-inclusion of Services Sector in the existing WPI, the development of a separate price index for Services Sector is recommended. Ultimately, this should be merged with the WPI, once the Services Sector index is stabilised and its robustness is established. The Consumer Price Index (CPI) is widely used for a variety of purposes and is also viewed as an indicator of the effectiveness of Government economic policies. However, in the absence of an all-India CPI, the WPI is currently used as a measure of inflation in India, though it is an inadequate indicator. The Commission has recommended the development of all-India consumer price indices for rural and urban areas.
