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Question 1

WPI:

1. by?
2. periodicity?
3. base year?

Answer 1

1. Office of Economic Adviser, Department for promotion of industry and internal trade, Ministry of Commerce & Industry
2. monthly
3. 2011-12

Question 2

Features of WPI?

Answer 2

1. ~700 items in the basket; increased in 2017 changes
2. New definition of wholesale price index does not include taxes in order to remove the impact of fiscal policy. This also brings new WPI series closer to the Producer Price Index and is in consonance with the global practices.
3. changed to weighted GM frm weighted AM; prior to 1952, WPI used to be GM as well
4. As a part of the revised WPI series, a separate WPI Food Index has been launched.

Question 3

WPI:

Breakup of the basket?

Answer 3

• Three major Groups:

1. Primary Articles: weight 23%
   
   • subcomponents: food articles, non-food articles, minerals and Crude Petroleum and Natural Gas
2. Fuel and power: weight 13%
   
   • subcomponents: coal, mineral oils and Electricity
3. Manufactured Products: weight 64%
   
   • sub-components: Food Products, beverages, textiles, paper products, chemical products etc.

Question 4

WPI: significance?

Answer 4

1. WPI is used as a deflator for many sectors of the economy for estimating GDP by CSO. It is also used to deflate nominal values of production in high frequency IIP
2. WPI is also used for indexation by users in business contracts.
3. Global investors also track WPI as one of the key macro indicators for their investment decisions

Question 5

WPI Food index?

Answer 5

1. As a part of the revised WPI series (base year 2011-12), a separate WPI Food Index has been launched.
2. WPI food index measures the changes in prices of food items at the level of producers.
3. The WPI Food index is compiled by taking the aggregate of WPI for Food Products under Manufacture Products and Food Articles under Primary Article using weighted arithmetic mean.
   
   • Food Articles under Primary Article — 15.26
   • Food Products under Manufactured Products — 9.12
   • WPI Food Index (1 +2) – 24.38
4. The combined index number of WPI Food indices together with the Consumer Food Price Index published by CSO, would help monitor the food inflation effectively

Question 6

WPI weights logic?

Answer 6

weighting diagram of WPI is not drawn on the basis of gross value added which is a concept followed in GDP. The WPI weights are derived on the basis of turnover or value of output adjusted for net imports

Question 7

WPI: first published in?

Answer 7

1942

base yr: 1939

Question 8

CPI: types? released by?

Answer 8

CPI (Urban, Rural and All India) is released by National Statistics Office (NSO), MoSPI

CPI (Industrial Workers), CPI (Agricultural Labour) and CPI (Rural Labour) released by the Labour Bureau, Ministry of Labour.

Question 9

CPI: which index was discontinued? when?

Answer 9

CPI-Urban Non Manual Employees CPI(UNME)

since 2010

was used to be compiled by CSO

Question 10

CPI-R, U & C: base yr? revision? why?

Answer 10

Currently, 2012

was revised to 2012 frm 2010 since 2015

For 2010 series, Consumer Expenditure Survey (CES) 2004-05 was used which was felt too outdated.

So 2012 series was started using Consumer Expenditure Survey (CES), 2011-12

Question 11

CPI-R, U and C: periodicity?

Answer 11

Monthly

Question 12

CPI-IW: base year? released by? feature?

Answer 12

1. 2001
2. Labor Bureau
3. Oldest among indices
4. used in calculation of Dearness Allowances

Question 13

CPI-AL: base year? released by? use?

Answer 13

1. 1986-87
2. Labor Bureau
3. used for calculation of Rural Employment wages

Question 14

CPI-RL: base year? released by?

Answer 14

1. 1986-87
2. Labour Bureau

Question 15

CPI-C: basket break-up?

Answer 15

1. Food and Beverages – 45.86
2. Housing – 10.07
3. Fuel and Light – 6.84
4. Clothing and Footwear – 6.53
5. Pan, tobacco and intoxicants – 2.38
6. Miscellaneous – 28.32

Question 16

Consumer Food Price INdex?

Answer 16

It is a component of CPI (C) . It measures the change in the retail prices of the food products only. The Weightage of the Consumer Food Price Index is 39%

Question 17

CPi-significance?

Answer 17

1. Since, RBI has adopted Inflation Targeting, CPI (C) is used as nominal anchor for conduct of monetary policy in India. [Monetary Policy Committee is mandated to keep CPI (C) in range 2% – 6%. So CPI is used for inflation targeting.
2. CPI is also used as deflators in the National Accounts.
3. CPI is also used for calculating Dearness Allowance

Question 18

WPI vs CPI?

Answer 18

1. WPI: weights based on Production Values; CPI: weights based on avg HH expenditure taken frm COnsumer expenditure surveys
2. WPI: doesn’t include services; CPI: includes
3. WEightage of Food grp: 24.4% in WPI; 39% in CPI
4. A significant proportion of WPI item basket represents manufacturing inputs and intermediate goods like minerals, basic metals, machinery etc. whose prices are influenced by global factors but these are not directly consumed by the households and are not part of the CPI item basket. Thus even significant price rise or decline in items included in WPI basket need not necessarily translate into CPI immediately

Question 19

Producer Price index: what?

Answer 19

PPI) measures the average change in the price of goods and services which is received by the producers.

Question 20

PPI vs WPI?

Answer 20

1. WPI captures the price changes at the point of bulk transactions and may include some taxes levied and distribution costs up to the stage of wholesale transactions. PPI excludes indirect taxes.
2. WPI does not cover services and whereas PPI includes services.
3. Weights of items in WPI are based on net traded value whereas in PPI weights are derived from Supply Use Table.
4. PPI removes the multiple counting biases inherent in WPI. PPIs can be compiled separately for Out PPIs, Input PPIs and Export and ImportPPIs. In build Stage of Processing indices can be compiles to avoid multiple counting.

Question 21

IIP?

Answer 21

It is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period

published monthly, six weeks after the reference month ends

by CSO i.e. NSO (now)

base year: 2011-12

Question 22

IIP: breakup?

Answer 22

• IIP is a composite indicator that measures the growth rate of industry groups classified under:
  
  • Broad sectors, namely, Mining, Manufacturing, and Electricity.
    
    • Mining: weight % increased marginally to 14%
    • Manufacturing: weight % marginally increased to 77%
    • electricity: weight % decreased to 8%
  • Use-based sectors, namely
    
    • Primary goods: 34%
    • INtermediate goods: 17%
    • Capital Goods: 8%
    • INfrastrucuture/construction goods: 12%
    • Consumer durables: 13%
    • Consumer non-durables: 15%
• eight core industries of India represent about 40% of the weight of items that are included in the IIP.

Question 23

Breakup of weightage of the Core sectors within IIP?

Answer 23

1. Refinery products: 28%
2. Electricity: 20%
3. Steel: 18%
4. Coal: 10%
5. Crude oil: 9%
6. Natural Gas: 7%
7. Cement: 5%
8. Fertilisers: 3%

Question 24

New definitions of MSMEs?

Answer 24

now defined on the composite basis of turnover + investment

Manufacturing & Services

1. Micro: INvestment: <1cr AND Turnover <5cr
2. Small: INvestment: <10cr AND Turnover <50cr
3. Medium: INvestment: <20cr AND Turnover <250cr (this limit was revised upward frm 100 cr originally announced in May package)

Question 25

New definition of MSMEs: features?

Answer 25

1. a new composite formula of classification for manufacturing and service units has been notified. Now, there will be no difference between manufacturing and service sectors.
2. Criteria based on Investment + Turnover
3. As part of new definition, Exports will not be counted in turnover for any enterprises whether micro, small or medium.
4. Ministry of MSME has put in place a very strong handholding mechanism for MSMEs and new entrepreneurs in the name of Champions