Economists advise Centre to improve inflation data

Analysts have increasingly argued that the inflation basket needs to be updated, as the last revision was conducted over a decade ago, but is still used for key policy decisions

India should update its inflation index more frequently and release key economic data earlier, according to economists consulted by the government who called for various improvements in the way data is released.

More than 50 economists met with key government officials in Mumbai this week, and suggested that frequent household consumption surveys should be conducted for more up-to-date revisions of the consumer price index, the statistics ministry said in a statement Wednesday.

Analysts have increasingly argued that the inflation basket needs to be updated, as the last revision was conducted over a decade ago, but is still used for key policy decisions. Food currently makes up half of the index, but subsequent surveys have shown its weighting has decreased over time as spending on discretionary items has grown.

“Better coverage of services in the revised series of CPI may be explored,” the economists said. Services contribute over half of India’s gross domestic product.

The economists separately asked for faster GDP data releases and changes in the publication time to provide sufficient time for analysis on the same day. GDP data is currently released at 5:30 p.m., and around two months after the relevant period ends. They suggested estimating the country’s GDP from two different approaches to reduce discrepancies, as well as breaking down GDP data by area, including adding district level information.