Mar 17, 2009

India Misleads on Inflation Figures

A very big fraud has been happening right under our nose in India and we were all taking False Claims of Indian authorities all this while.  

Almost every Friday Since last 7 months we are cheering up that Indian inflation is coming down. Is it really true? Prices are going up like anything.

India calculates its official inflation based on Wholesale Price Index (WPI) rather than Consumer Price Index (CPI) based inflation. WPI is never an indication of the inflation simply because the consumers do not buy from wholesale markets. They buy at retail level. Most economies like US, UK, Japan, France, Singapore, and China etc. have selected CPI as its official barometer to weigh its inflation. And hold your breath even Pakistan follows CPI. (And all that while you laughed at high inflation in that country).

But our country, India, is amongst rare countries of the world, which uses WPI as its official scale to measure the inflation in the economy. Simply because WPI is always lower than CPI, thereby painting a false picture to the electorate that prices have fallen. So figures of 2.63% as claimed by Indian authorities are untrue. As per CPI our inflation figures stand at 10.5% in January up from 9.7% in December. Now you can make out the huge difference between WPI and CPI, 6.5%!

If that is the reason why CPI is being used by Indian authorities? I see two main reasons.

  1. Since WPI figures are always lower than CPI, the innocent public of India is fooled into believing that prices are coming down and hide the actual price rise on the pocket of consumer.
  2. WPI index tells us about commodity producers, manufacturers, bulk sellers and market owners. A low WPI is an indication to them that their selling prices rate is decreasing and gives them all good reasons to raise the wholesale prices. After all money for elections come from these rich people.

If we see Academically also the WPI calculation in India is flawed.

1st Flaw - At least 1,918 quotations should be received for assessing changes in WPI but Indian authorities invite not more than 1200 quotations. So price information is not even.

2nd Flaw – From 435 commodities in WPI , more than 100 are no more important from consumer point of view so the price fall in these 100 commodities does not really affect the Indian consumers.

3rd Flaw - There is a huge difference between the provisional and final index figure!! Once in April 12, 2008, the provisional figure of inflation was 7.33, which were revised as final inflation figure of 7.95 what a healthy error!!

4th Flaw - WPI measures the general level of price changes at the level of either the wholesaler or at the producer and does not take into account retail margins. WPI does not reflect the actual price hike, which the consumer is paying.

5th Flaw - Service sectors are not duly accounted in WPI. Service sector like health and education are important as consumers are increasingly spending more money on these items. So if education fee goes up or Doctor fees goes up, it doesn’t matter to Indian government.

6th Flaw - WPI measures the price changes from the production side and never from the consumption side It is surely a lop sided viewpoint of consumers.

Besides all these Frauds Indian Authorities will thump their chests at bringing down the Inflation. That’s what I call 'Shamelessness'


  1. You just compare the prices in IRCTC stalls of Railway stations with the prices in open market. Even water bottle costs Rs.2 more. Chips packets or cool drinks cost Rs.2 to Rs.5 more depending on the place. And then IRCTC is the monopoly agent of Railways for looting the public. Secondly, when people do not crowd the railway stations and reservation counters for booking, instead use Internet, the Railways is benefitted more. Frauds are reduced, Maintenance is reduced, number of counters and clerks is reduced, stationery cost is reduced and even electricity charges and connectivity charges are reduced, but IRCTC charges Rs.10 per person as service charges. When the road over bridges and roads are built with our tax money and contractors are already given a higher charge for that, why again do we need to pay Toll Gate Charges? Is this not a cruel fraud on common man? When there are clear indications of government looting the public, why to read Inflation figures. We and the government know well that we are helpless.

  2. Where can one obtain the CPI figures for India?


  4. Shyam you are absolutely correct.

  5. Get the CPI

  6. what are the solutions? Can median not take a step further to show this reality to people of India?

  7. well im in deep shock due to this
    amul cheesespread which i absolutely love, has gone up from 36 to 40 to now 46 rs in less than a year !
    frickin ridiculous

  8. Hi dman for you inflation rate is 30%.. :)

  9. Indian government is made of politicians.Majority of politicians are criminals,embezzlers,corrupt and down right dishonest.what can you expect from a government like this.They have looted all parents of their hard toiled money (even entire service savings and benefits etc.,) in ne sweep with education seats engineering and medicine.
    you cant expect them to behave in any other way.
    vote this time with a difference. It is a long steep hill, to reach a reasonable government.

  10. I donno if ur "majority" word said is enough to describe the No. of criminals, corrupt people etc in politics, Also Dishonest is a word which also cant describe the nature of these people... its Cheaters.. or may be words which are out of my littl dictionary... Advani is shouting about the swiss bank money of all the corrupt politicians... mainly congress which he wants to bring back... But why if he being a prime miniter candidate is so confident No action has been taken till date.... He will bring it back only if he wins the election... is it so ????
    and whoever is reading this blog can tell me honestly if he knows any party which has 100% honest politicians and which has not even a penny black in their party.... i dont understand if the salary of the Mp MLA Ministers is so low how can the party have money in crores to spend on elections... obviously it is funded by some big money bank people, industrialists, rich people etc... So crores of Rs are spent to get a seat which gives u a salary of few thousands per month????? whatever money is spent in elections is an inverstment for five year "fruit" giving seat....
    i was reading an interesting news
    on expressindia about the politicians who escaped the attack of taj hotel, some person has asked about the right of politicians to stay in five star hotels coz whatever penny is spent on politicians comes from the tax which i pay, we all pay from our own pocket, even for the net connection i am using out of the rent i pay some amount goes to government. SO hows our money is being spent or used. Why it is that even when so much talent is available in our country where even people from india have conquered key positions in global places like NASA, companies like microsoft etc.... we dont see a handful of talented politicians, apart from a few which are very few to make difference, even if u dont have degrees etc at least a white background... why??? People dont understand the fact that every five years same promises are made and repeated again in next elections... everything done by the ruling party is a big NO NO by the opposition left... Anything unfortunate happens and the opposition wants some resignation of concerned minister, home minister, prime minister... so if lalu resigns after a train accident (may be due to a drivers mistake or a signal mistake or any other reason) will that resignation bring train accidents to zero for future.. if someone asking a resignation gives a gaurantee lets go for it and m sure lalu will also co operate for the holy cause... if terrorist attack can be stopped by resignations only why have an army... u just want to prove that the ruling party is not capable.. if u were capable why u were not elected ??? every body in one party blames the other party politicians to be corrupt... still no body takes action against anybody... since everyone is wet in same crime...
    why in the name of hindu and muslims speeches are given... why promise temple.. why not hospital school or park.... where people from all religion can get benefits and they can still worship god in their own hearts....
    I'm sure if there is god in any name he wants peace rather than rally's riots demolitions.. attacks on innocent people....
    As my above friend has said vote this time with a difference i really dont know the way to vote with a difference...