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New index being finalised to measure production cost

business Updated: Feb 22, 2012 21:19 IST
HT Correspondent

You will soon know production cost of different goods.

A new parameter --- production price index (PPI) --- is being finalised to understand the dynamics of the Indian market, a cause for high inflation in the last two years.

There is already a wholesale price index (WPI) and consumer price index (CPI) but an essential element to find profit margins of middlemen --- the production cost --- is not known.

Minister of state for programme implementation Srikant Jena said the new index would help the government in understanding the cause of inflation. "Over a period of time, the PPI will be linked to CPI," he said.

The minister also said the difference between WPI and the new CPI is just one percentage point shows that the collection of data has been authentic. But, the PPI will provide the government authentic data from the ground level.

The new index will have production cost of different agriculture produces and the retail items produced by companies. The ministry already covers 1,100 villages and around 310 urban centers for collecting data for CPI.