The government on Thursday said it has constituted an 18-member working group, under the chairmanship of NITI Aayog Member Ramesh Chand, to revise the Wholesale Price Index (WPI) base year from 2011-12 to 2022-23.

The revision of the base year helps in presenting a more realistic picture of the price situation in the country.

As per the Terms of Reference (ToR) of the group, it will suggest the commodity basket of WPI and Producer Price Index (PPI) with the base year 2022-23 in the light of structural changes in the economy; review the existing system of price collection and suggest changes for improvement; and decide on the computational methodology to be adopted for WPI / PPI.

The group will also examine the methodology for the compilation of PPI, suggest further improvement in compilation and presentation and recommend a roadmap for switch over from WPI to PPI.

The members of the group include representatives from the RBI, Department of Economic Affairs, Ministry of Statistics, Department of Agriculture, Department of Consumer Affairs, Ministry of Petroleum and Natural Gas; Soumya Kanti Ghosh, Chief Economist, SBI Group.

The non-official members include Economist Surjit Bhalla; Shamika Ravi, Member, Economic Advisory Council to PM; Dharmakirti Joshi, Chief Economist, Crisil; Nilesh Shah, MD, Kotak Mahindra Asset Management; and Indranil Sengupta, Co-Head and Economist, Bank of America Merrill Lynch.

Earlier, there was a plan to revise the base year from 2011-12 to 2017-18.

The Department for Promotion of Industry and Internal Trade (DPIIT) in June 2021 had issued a draft technical report of a working group, which suggests revising the base year of the wholesale price index and addition of about 480 new items such as medicinal plants, lifts, gymnasium equipment and certain motorcycle engines in the new series.

At present, the index has a total of 697 items, including primary articles (117), fuel and power (16), and manufactured products (564).

WPI revision is a periodic exercise. Two major indices are used for tracking price movement -- Wholesale Price Index (WPI) and Consumer Price Index (CPI).

While the WPI measures the price movement of goods in wholesale markets, the CPI tracks inflation at the retail level and also includes certain services.

WPI is a key indicator to measure the average change in prices of a fixed set of commodities at the initial stage of a commercial transaction over a given period of time with reference to a base year.

Ever since the introduction of the WPI in 1942 with the base year 1939, seven revisions have taken place introducing new base years - 1952-53, 1961-62, 1970-71, 1981-82, 1993-94, 2004-05 and 2011-12.

The current WPI base year 2011-12 series was launched in May 2017.

Wholesale price-based inflation declined to a 3-month low of 1.89 per cent in November on cheaper food items.

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