New numbers: the Producer Price Index and the new industrial index
LeadPrelims and MainsJune 2026
Why in news
In June 2026 India released a new Index of Industrial Production and a new Wholesale Price Index, both on the base year 2022-23. With them came India's first Producer Price Indices, which will replace the wholesale index in about five years.
Background
- An index measures change against a base year. The base year fixes the basket of goods and their weights.
- India's main series had used bases more than a decade old: 2011-12 for GDP, industrial output and wholesale prices, and 2012 for consumer prices.
- An old base misses new products and the changed shape of the economy.
- Through 2026 every series moved: GDP to 2022-23, consumer prices to 2024, and now industrial output and wholesale prices to 2022-23.
Wholesale price and producer price compared
- The Wholesale Price Index measures prices at the stage of the first bulk sale, and it covers only goods.
- A Producer Price Index measures what the producer receives. It excludes taxes and transport, and it can cover services.
- The wholesale index counts the same price rise more than once as a good passes down the chain; the producer index avoids this.
- The producer index is the international standard.
What was launched
- An Output index for goods, a trial Input index for manufacturing, and a Services index for seven services, among them banking, railways and telecom.
- The wholesale index runs alongside for five years, so that contracts tied to it can switch. The industrial index moved to producer prices as its deflator in June, and the new GDP series uses them too.
- The new industrial index is wider: it adds water supply, sewerage and waste management as a fourth section.
Why it matters
- Real growth: output in rupees is turned into real output by dividing by a price index. A better price index gives a truer growth figure.
- Policy: the Reserve Bank and the Budget lean on these numbers.
- Trust: India's national accounts had drawn a poor grade from the International Monetary Fund for their dated methods.
- The risk: a jump in growth or inflation that comes only from a change of base weakens confidence, unless the old and new series are linked in the open.
The way forward
- Publish the back series and the linking method with each new series.
- Fix a calendar for revising base years, every five years.
- Move contracts and policy from the wholesale index to the producer index in step.
Prelims facts
- Base years now: GDP, industrial output and wholesale prices 2022-23; consumer prices 2024.
- The industrial index and consumer prices are released by the statistics ministry; wholesale and producer prices by the Office of the Economic Adviser in the commerce ministry.
- The Reserve Bank's inflation target is on consumer prices, not wholesale prices.
- The Index of Core Industries now has nine industries, with iron ore added.
- A Producer Price Index can cover services; the wholesale index does not.
See also: The new GDP series
Sources: The Hindu, 2 Jun 2026: Govt to replace WPI with Producer Price Index, new series from June 15 (opens in a new tab) · The Hindu, 1 Jun 2026: IIP growth slows to 4.9% as new data shows dip in mining activity (opens in a new tab) · The Hindu, 15 Jun 2026: Wholesale inflation jumps to 9.7% in May 2026 on surging fuel prices (opens in a new tab) · The Hindu, 15 Jun 2026: Govt releases producer price index data; to replace WPI in 5 years (opens in a new tab) · The Hindu, 29 Jun 2026: IIP growth quickens to five-month high of 5.1% on cross-sector improvements (opens in a new tab) · Ministry of Statistics and Programme Implementation, 1 Jun 2026: Index of Industrial Production, press release on the base 2022-23 (opens in a new tab) · The Week, 2 Jun 2026: India's industrial production in April on the new base year (opens in a new tab) · The Indian Express, 3 Jun 2026 · The Tribune, 15 Jun 2026: Wholesale price inflation hits 9.68% in May; ministry introduces revised base year series (opens in a new tab) · The Hindu, 21 Jun 2026 · Press Information Bureau, 12 Jun 2026: Consumer Price Index, May 2026 (opens in a new tab) · The Hindu, 5 Jun 2026: GDP growth estimated at 7.7% in 2025-26, with Q4 growth hitting 7.8% (opens in a new tab) · Outlook Business, 5 Jun 2026: India's GDP grows 7.8% in Q4; full year growth at 7.7% (opens in a new tab) · Business Today, 22 Jun 2026: India's core sector growth slows to 0.5% in May as energy output weakens (opens in a new tab)
Earlier coverage: The Producer Price Index and the new statistical series · The monthly magazine, June 2026