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Difficulty: MediumEconomic Developments, Union & State Budgets, and Economic Surveys

Regarding the inflation dynamics, price indices, and institutional frameworks featured in recent Union Budgets and Economic Surveys, which of the following statements are correct?

  1. Food and beverages carry a substantially higher weightage in the Consumer Price Index (CPI-Combined) than in the Wholesale Price Index (WPI).Answer
  2. B
    The Wholesale Price Index (WPI) incorporates service sector transactions to reflect price fluctuations in the expanding services economy.
  3. The Consumer Price Index (CPI-Combined) is compiled and released on a monthly basis by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.Answer
  4. D
    The official base year currently used for calculating both the Consumer Price Index (CPI-Combined) and the Wholesale Price Index (WPI) is 2018–19.

Answer

The statements confirming that food and beverages carry a higher weightage in CPI than in WPI, and that the NSO compiles and releases the Consumer Price Index monthly, are correct.
The correct statements correctly identify that food and beverages carry a much larger relative weight in consumer inflation metrics (CPI) than in wholesale inflation metrics (WPI), and accurately identify the National Statistical Office (NSO) under MOSPI as the official compiling authority for CPI-Combined.

Step-by-Step Solution

1
Analyze the structural composition and item weightage differences between CPI-Combined and WPI.
Food items constitute approximately 45.86% of the CPI basket, whereas food articles constitute a significantly lower weight in WPI. Hence, the statement regarding weightage is correct.
Understanding basket composition is essential for evaluating headline vs core inflation trends.
2
Verify sector coverage and institutional releasing authorities for both inflation metrics.
WPI excludes services entirely and is released by the Office of Economic Adviser (DPIIT), while CPI includes services and is released by the NSO (MOSPI). Thus, the claim that WPI includes services is incorrect, while the NSO release authority statement is correct.
Distinguishing releasing agencies and coverage prevents conflating wholesale and retail price indices.
3
Examine the official base years designated for current macro-statistical series in India.
The active base year for WPI is 2011–12 and for CPI-Combined is 2012, making the assertion of a 2018–19 base year incorrect.
Accurate knowledge of macroeconomic base years is required for interpreting real growth and price deflators.

Key Concept

Price Indices Composition, Releasing Agencies, and Weightage Distribution in India
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Topics

Economic Developments, Union & State Budgets, and Economic Surveys

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