Discussion paper 2.0: India explores refined CPI compilation to reflect free PDS scheme

New Delhi: The government on Saturday announced that it is revising the base of the Consumer Price Index (CPI), releasing Discussion Paper 2.0 on the treatment of free Public Distribution System (PDS) items in CPI compilation.

The exercise aims to expand the coverage of price collection, refine existing methodologies, explore new data sources, and leverage modern technology for accurate price collection and index compilation.

With the launch of the government’s free food grain distribution scheme from January 1, 2023, covering 75 per cent of the rural population and 50 per cent of the urban population, the need for an appropriate and realistic reflection of these items in CPI and inflation measurement has become increasingly relevant, the Ministry of Statistics and Programme Implementation (MoSPI) said.

“The issue has been deliberated in detail with the National and international experts, Reserve Bank of India, International Monetary Fund and other UN Institutions and Government organisations,” the ministry added.

The proposed methodology in Discussion Paper 2.0 incorporates suggestions and feedback from these consultations. MoSPI is inviting comments and views from experts, academicians, government bodies, state governments, financial institutions, and other stakeholders on the treatment of free PDS items in CPI compilation. Comments can be submitted by October 22.

CPI inflation edges up in August

Meanwhile, India’s inflation rate based on the CPI rose to 2.07 per cent in August, although food prices continued to decline, easing the burden on households.

Headline inflation in August was slightly higher than 1.61 per cent recorded in July, the lowest year-on-year retail inflation since June 2017. The inflation rate remains well within the RBI’s 4 per cent target, allowing the central bank to continue its accommodative monetary policy to support economic growth.

IANS