MoSPI to Use Producer Price Index Instead of WPI for GDP Deflation

The Ministry of Statistics and Programme Implementation (MoSPI) has announced that it will replace the Wholesale Price Index (WPI) with the Output Producer Price Index (PPI) as the deflator used for quarterly and annual Gross Domestic Product (GDP) estimates, wherever applicable.

MoSPI said the change is meant to make real GDP estimation more accurate, bring India's statistical methods closer to international standards, and better capture shifts 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 be central to the revised GDP estimation framework.

Understanding the Producer Price Index

The PPI tracks the average change in prices received by producers for goods and services before they reach consumers. This differs from the WPI, which primarily tracks wholesale market prices. MoSPI considers PPI a more accurate gauge of production costs and economic output, and its adoption brings India in line with international statistical practice.

Reasons for the Switch

According to MoSPI, replacing WPI with PPI is meant to:

• Improve the accuracy of GDP estimates.
• Better capture real economic growth.
• Reflect actual prices received by producers.
• Bring India's National Accounts closer to international statistical standards.
• Cut down distortions in GDP calculations caused by the earlier method.

MoSPI expects the change to give policymakers, economists and investors more dependable economic data.

A New Double Deflation Method

The revised GDP framework will also introduce the Double Deflation Method.

How Double Deflation Works

Under this method, output values are adjusted using the Output PPI, while input costs are adjusted separately using relevant input price indices. The gap between inflation-adjusted output and inflation-adjusted input gives a more accurate estimate of Real Gross Value Added (GVA). This approach is widely used internationally for national income accounting.

A New Base Year for GDP

The revised GDP series will also shift the base year from 2011-12 to 2022-23. MoSPI said the updated base year will help GDP calculations better reflect current production patterns, structural changes in the economy, emerging industries, and new consumption and investment trends.

WPI Will Still Be Published

Even though WPI will no longer be the main GDP deflator, it will continue to be published and may still be used for select analytical purposes. The Consumer Price Index (CPI) will continue to be used for specific granular items wherever appropriate.

When the Change Takes Effect

MoSPI plans to roll out the revised methodology from the April-June quarter (Q1) of FY 2026-27, alongside the release of revised back series GDP data based on the new approach, to keep GDP estimates continuous and comparable over time.

WPI and PPI Inflation Compared

Based on the revised price indices, WPI inflation stood at 9.68% in May 2026 and 9.87% in June 2026, while Output PPI inflation stood at 9.38% in May 2026 and 9.57% in June 2026. MoSPI said these differences between wholesale and producer prices underline the need for a more representative GDP deflator.

Another Recent MoSPI Move

In a separate statistical initiative, MoSPI introduced India's first trial version of the Index of Services Production (ISP) in July 2026. The ISP is meant to measure the monthly performance of the formal services sector, improve high-frequency economic indicators, and strengthen the country's statistical framework.

Why the Reform Matters

MoSPI said the shift to PPI as the GDP deflator will improve the quality of national income estimates, enhance the international comparability of GDP data, provide a more accurate measure of real economic growth, support evidence-based policymaking, and improve macroeconomic analysis and forecasting. It is being described as one of the most significant methodological reforms to India's GDP estimation system in recent years.

Key Points

• MoSPI will replace WPI with the Output PPI for GDP deflation.
• The 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 GDP estimation.
• The earlier Single Deflation Method using WPI will be discontinued.
• The revised methodology takes effect from Q1 (April-June) FY 2026-27.
• CPI will continue to be used for specific items where applicable.
• MoSPI recently launched a trial version of the Index of Services Production (ISP) for the formal services sector.