1 month ago
India to use PPI for GDP deflation
The Indian government is planning to use the Producer Price Index (PPI) instead of the Wholesale Price Index (WPI) to adjust GDP figures for inflation.
This change is expected to make India's GDP calculations more accurate and align them with international standards.
The new method will be used starting from the April-June quarter of 2026-27.
Economists believe this change won't significantly affect GDP growth rates in the short term, but it will make the size of real GDP more accurate.
The government has also updated the base year for GDP calculations to 2022-23 from 2011-12, which has led to changes in how inflation adjustments are made.
The WPI will be phased out in favor of the PPI, and the Consumer Price Index (CPI) will continue to be used for more detailed adjustments.
India will use the Producer Price Index (PPI) for GDP deflation starting April-June 2026-27.
The change aims to align national accounts data with international standards.
Economists expect minimal impact on GDP growth rates in the short term.
The base year for GDP series has been updated to 2022-23 from 2011-12.
Double deflation will be used in sectors like manufacturing and agriculture for more accurate measurements.
- Who
- Ministry of Statistics and Programme Implementation (MoSPI)
- What
- Adoption of PPI for GDP deflation
- Where
- India
- When
- Expected release in April-June quarter of 2026-27
- Why
- To bring national accounts data closer to international standards and improve accuracy
Economists' Perspective
Government's Perspective
Impact on GDP Growth Rates
Economists' Perspective
Economists do not expect major changes in GDP growth rates in the short term.
Government's Perspective
The government aims to bring national accounts data closer to international standards.
Key facts
- Current Deflation Method
- WPI (Wholesale Price Index)
- New Deflation Method
- PPI (Producer Price Index)
- Expected Release Date
- April-June quarter of 2026-27
- Base Year for GDP Series
- 2022-23
- Previous Base Year
- 2011-12
- Deflation Methodology Change
- Single deflation eliminated, double deflation adopted
- WPI Inflation (June)
- 9.87%
- Output PPI Inflation (June)
- 9.57%
Quotes
N R Bhanumurthy
Director, Madras School of Economics
“"The ministry is planning to incorporate the new PPI series when compiling both annual and quarterly national accounts. The updated estimates may be released along with the GDP estimates for the April-June quarter of 2026-27,"”
financialexpress.com
“"The ideal measure is the PPI. In that sense it is a right measure by MoSPI to shift to PPI. Growth rate may not change much. But the size of real GDP may change,"”
financialexpress.com
Sources
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