9. WHOLESALE PRICE INDEX (WPI) The Wholesale Price Index (WPI) measures the relative changes in the prices of commodities traded in the wholesale markets. In India, the wholesale price index numbers are constructed on weekly basis. The year 2011-12 is being used as the base year. Commodity Group and Weightage of Wholesale Price Index In India, all the commodities have been classified in the following three groups: Commodity Group Name of Commodities Weightage (i) Primary Articles. These include 117 commodities like 22.26 Rice, Fruits, Pulses, Vegetables and. Non-foad articles like Conon, Jute, Metals. (ii) Fuel, Power, Light These include 16 items like Goa and Lubricints Manufacuring Fertilizers, Leather, etc. ‘Scanned wih CamScanner(uses of Wholesale Price Index (1) (2) (3) Forecasting Demand and Supply: The wholesale price indices are often used to fo t demand and supply situation in the economy. An increase in wholesale price index is an indication of excess demandJIt is a situation in which demand is greater than supply. On the other hand, a decrease in wholesale price index implies deficient demand. Itis a situation in which demand is less than supply. Estimation of Monetary Value and Real Value: The wholesale price index can be used to estimate the monetary value and real value ofaggregates like national income and expenditur Monetary value is the value estimated at cur i } Real value is the value estimated at base year prices or at constant prices. The monetary aggregate can be converted into real aggregate by applying the following formula: VE Real Aggregate of the Current Year = Monetary Ag: Price Ind * Price Indes Indicator of Rate of Inflation) The wholesale price index is also applied to calculate the rate of inflation in a country. It refers to the rate at which prices tend to increase over time. ‘Scanned wih CamScanner10. INDEX NUMBER OF INDUSTRIAL PRODUCTION Index number of industrial production is that index which measures the relative increase or decrease in the level of industrial output in a country in comparison to the level of production in the base year. In India, the base year for the current series is 2011-12. These index numbers tell us about the changes in the quantum of production. These index numbers are useful in estimating the growth of industrial production in the economy. Construction of Index Number of Industrial Production Construction of the index number of industrial production involves the following steps: (1) Classification of Industries: To construct index of industrial production the industries are cl following groups: {i) Mining, (ii) Manu (2) Statistics or Data Related to Industrial Productio: data relating to the production of the above mer industries are collected either monthly, quarterly or y number fied into facturing, and (iii) Electricity. (3) Weightage: Weights are given on the basis of the relative importance of different industries. The weights are ed on the values of net output of different industries, and their contribution to national income. In India, the following weightage is given to different groups at present: Group Weightage (1) Mining 14.87 (2) Manufacturing T1863 (8) Electricity 8.00 Toul 100,00 | Index Number of Industrial Production is calculated by us the following formula: FORMULA Index Number of Industrial Production where, q, = Level of production in the current year. qy = Level of production in the base y Ww an, Weight or relative importance of industrial output. ‘Scanned wih CamScanner