Every week, a fax machine in economic advisor's office at Udyog Bhawan, which houses the commerce and industry ministry, receives price data for items in the Wholesale Price Index basket. The data have to be the actual transaction price effective each Friday and is to be submitted on a voluntary basis every week.

The problem is that the data are often inadequate and delayed. With legislation that would empower the government to take defaulters to Court pending for over a year, the problem has raised serious questions about the veracity and accuracy of the country's headline inflation data.

This lack of regular and detailed disclosure by companies or respondents lies at the core of the problem, one that has gained ground in recent weeks.

In just two months, the inflation rate rose two percentage points from 5.66 per cent for the week ended February 16 to an uncomfortably high level of 7.61 per cent for the week ended April 26. Delayed revisions to metals prices among other items were blamed for the spike.

However, the full extent of the lack of revisions and the consequent misleading nature of the inflation numbers are apparent from the detailed analysis of the index movements for the 435 items that constitute the WPI basket.

As of April 26, when the last WPI release was made, the index for as many as 167 individual items had not been revised for periods ranging between eight months and over 60 months.
 

A comprehensive analysis of the WPI data for the week ended April 26 shows that of these unrevised items, the index for as many as 131 items including betel nut, coffee, plastic containers, air-conditioners, toilet soap, toothpaste and fireworks among others have not been revised for a year.

Cursory checks at the market, from industry associations and individual experts, reveal that wholesale prices of many unrevised items have seen significant upward movements, even as some items have also actually seen a decline in prices.

Take for instance, a crucial item like coke, the index for which was last revised in January 2005, has actually seen a massive price increase.

"From $30 a tonne, the price has gone up to $90 over the past four years. Metallurgical coke is a key input for power generation and to that extent the price increase has a spillover effect," said Viren Vakil, CEO, Paradigm Commodity Advisers.

He also said that prices of copper wire (all types), the index for which has not seen a revision for over 60 months, have also gone up from Rs 80 per kg to Rs 340. Another instance of the lack of revisions is of periodicals, other than newspapers.

The index for this item has not been changed since April 2002, although actual prices have almost doubled. "Widely-read English magazines like India Today and Outlook raised their prices to Rs 12 from Rs 10 in 2002. The prices subsequently went to Rs 15 and now they stand at Rs 20," said Anurag Batra, publisher and editor-in-chief, of publishing house Exchange4media group.

Even as the index for air-conditioners has not been revised since June 2007, Suresh Khanna, secretary general, Consumer Electronic & Appliance Manufacturers Association said prices increased by around 3 per cent in January this year.

The lack of revisions is also partly on account of seasonality, the lack of price movement in some items (especially manufactured products that do fluctuate weekly), as well as the fact that the prices of many items (like domestic cooking gas) are administered and therefore have not change.

Officials of the Department of Industrial Policy and Promotion, which is the nodal department for the nationwide compilation and weekly dissemination of the WPI data, blame the delayed revisions to the lack of timely data submission.

"The delays are on account of units (producers or traders) that have been shortlisted to provide the data, are not doing so on a regular basis. The data is submitted on a voluntary basis. If someone does not send it, at best we can send the unit a reminder. We cannot jail anyone for failure to comply," an official said.

The Collection of Statistics Act, 1953 does not provide enough powers to the statistics wing of the government to penalise a company for not providing data in time.

However, the Union Cabinet has approved Collection of Statistics Bill, 2007 which empowers the statistics department to take defaulting companies to Court for such transgression. The Bill is pending legislative approval.

Pronab Sen, India's chief statistician, said the sample used in the index cannot include the entire data universe available. "Any index is based on samples. No index can have a 100 per cent sample size. It is possible that the samples included in the survey have not increased their prices. However, there is always a problem with the response that we receive," he said.