MoSPI to Replace Wholesale Price Index with Producer Price Index for GDP Deflation

The Ministry of Statistics and Programme Implementation (MoSPI) has announced a major reform in India’s national accounting system by replacing the Wholesale Price Index (WPI) with the Output Producer Price Index (PPI) as the GDP deflator for quarterly and annual Gross Domestic Product (GDP) estimates, wherever applicable.

The move aims to improve the accuracy of real GDP estimation, align India’s statistical practices with international standards, and better reflect changes in production costs and economic activity.

The Producer Price Index (PPI) series was released by the Department for Promotion of Industry and Internal Trade (DPIIT) in June 2026 and will now play a central role in the revised GDP estimation framework.

What is the Producer Price Index (PPI)?

The Producer Price Index (PPI) measures the average change in prices received by producers for goods and services before they reach consumers.

Unlike the Wholesale Price Index (WPI), which mainly tracks wholesale market prices, the PPI reflects actual prices received by producers and is considered a more accurate indicator for measuring production costs and economic output.

The adoption of PPI aligns India with international statistical best practices followed by many advanced economies.

Why is MoSPI Replacing WPI with PPI?

The replacement of WPI with PPI is intended to:

• Improve the accuracy of GDP estimates.
• Better measure real economic growth.
• Reflect actual producer prices.
• Align India’s National Accounts with international statistical standards.
• Reduce distortions in GDP calculations caused by the earlier methodology.

The change is expected to provide policymakers, economists, and investors with more reliable economic data.

Introduction of the Double Deflation Method

A major feature of the revised GDP framework is the adoption of the Double Deflation Method.

What is Double Deflation?

Under this method:

• Output values are adjusted using Output Producer Price Index (Output PPI).
• Input costs are adjusted separately using relevant input price indices.

The difference between inflation-adjusted output and inflation-adjusted input provides a more accurate estimate of Real Gross Value Added (GVA).

This approach is widely accepted internationally for national income accounting.

Change in GDP Base Year

As part of the revised GDP series:

• Old Base Year: 2011–12
• New Base Year: 2022–23

Updating the base year ensures that GDP calculations better represent:

• Current production patterns.
• Structural changes in the economy.
• Emerging industries.
• New consumption and investment trends.

What Happens to the Wholesale Price Index?

Although WPI will no longer serve as the principal GDP deflator:

• It will continue to be published.
• It may still be used for selected analytical purposes.
• Consumer Price Index (CPI) will continue to be used for specific granular items wherever appropriate.

Implementation Timeline

MoSPI plans to implement the revised methodology:

• From: April–June Quarter (Q1) of FY 2026–27.
• Along with the release of the revised back series GDP data based on the new methodology.

This will ensure continuity and comparability of GDP estimates over time.

Recent Inflation Comparison

According to the revised price indices:

Price Index	May 2026	June 2026
Wholesale Price Index (WPI) Inflation	9.68%	9.87%
Output Producer Price Index (PPI) Inflation	9.38%	9.57%

These figures highlight the differences between wholesale prices and producer prices, reinforcing the need for a more representative GDP deflator.

Recent MoSPI Initiative

In another important statistical reform, MoSPI introduced India’s first trial version of the Index of Services Production (ISP) in July 2026.

The ISP aims to:

• Measure monthly performance of the formal services sector.
• Improve high-frequency economic indicators.
• Strengthen India’s statistical framework.

Significance of the Reform

The adoption of PPI as the GDP deflator will:

• Improve the quality of national income estimates.
• Enhance international comparability of GDP data.
• Provide more accurate measurement of real economic growth.
• Strengthen evidence-based policymaking.
• Improve macroeconomic analysis and forecasting.

It represents one of the most significant methodological reforms in India’s GDP estimation system in recent years.

Key Takeaways

• MoSPI will replace the Wholesale Price Index (WPI) with the Output Producer Price Index (PPI) for GDP deflation.
• The Producer Price Index (PPI) was released by DPIIT in June 2026.
• The GDP base year has been revised from 2011–12 to 2022–23.
• India will adopt the Double Deflation Method for more accurate GDP estimation.
• The Single Deflation Method using WPI will be discontinued.
• The revised methodology will be implemented from Q1 (April–June) FY 2026–27.
• Consumer Price Index (CPI) will continue to be used for specific items where applicable.
• MoSPI recently launched the trial version of the Index of Services Production (ISP) to measure the formal services sector.