JURJ

Needo-data on Inflation in India: An Analysis of Methodology of Measuring Inflation

Author: Mayank Goel

Abstract:

To understand, analyze and interpret the needo-data and measurement issues on inflation falls in the domain of this paper. Good data is at the heart of public policy making. To enable data-driven policy making, we need to create data infrastructure of measurement for various performance indicators including inflation. As consumer, every Indian is affected by inflation but its data is faulty as measurement is based on wrong methodology. In India we use three different indices for measuring inflation including the Wholesale Price Index (WPI), Consumer Price Index (CPI) which is calculated for different types of workers namely Industrial Workers (CPI-IW), Urban Non-Manual Employees (CPI-UNME), Agricultural Laborers (CPI-AL) and Rural Laborers (CPI-RL) and the Gross Domestic Product Deflator (GDP Deflator). The measurement of inflation is done as a ritual monthly to calculate annual rate of inflation which is a wrong method of doing so. We need to do our best in terms of the awareness of the stakeholders about the needed data on inflation in India and its methodology of measurement.