The first meeting of the Ramesh Chand-led working group on the planned index will be held next week where the issue will be taken up. “The idea of introducing producer price index is that it will capture better the prices received by farmers,” Chand told ET.
In the meeting, the group is expected to set up a few sub-committees to work on the base year of WPI, and the basket for PPI.
“We hope to submit our recom-mendations in two months,” Chand added.
PPI measures the average change over time in the selling prices received by domestic producers. The prices included in PPI are from the first commercial transaction for many products and some services. This is seen as a better index than the wholesale price index (WPI). PPI will eventually replace WPI.
The government is of the view that in India’s case, given significant presence of agricultural items (both food articles and non-food articles), it is essential that the new index includes agricultural items in it.