Page 30 - CII-ARTHA

ARTHA

A Truer Mirror for a

Transformed Economy:

Why CPI Rebasing Matters

for Indian Industry

T The release of India’s revised Consumer Price expanding its share in the growth composition, and

Index with base year 2024 on 12 February by
th
digitalisation has reshaped how households consume.
the Ministry of Statistics and Programme
previous base year no longer mirrored the spending
Implementation (MoSPI) marks a defining moment for The consumption pattern that was captured in the
economic measurement in India. This is not merely a pattern of the Indian households. Drawing on the
technical exercise in statistical housekeeping. Household Consumption Expenditure Survey (HCES)
For industry, it represents a fundamental recalibration of 2023–24, the rebased index with 2024 base now
of the lens through which the economy is viewed, incorporates these shifts, providing policymakers and
policy is formulated, and business decisions are industry with a far more accurate reading of the price
shaped. CII has long advocated for this update and pressures that households actually face.
industry is happy with the decisive move taken by the The most significant adjustment for industry in the
government to harmonize the framework of inflation in updated series is the decreased weighting assigned
India to better reflect the realities of a diversifying and to food & beverages, which has been lowered from
growing economy. The previous CPI series which was approximately 46 per cent in the previous series to
anchored to the base year of 2011-12 had served the about 40 per cent in the current series. This
nation well for over a decade. However, during this modification is based on empirical evidence and aligns
period, the Indian economy has undergone a profound with Engel’s Law, a well-established principle
structural transformation. Incomes have risen, asserting that as income rises and economic
urbanisation has accelerated with the services sector development progresses, the share of spending on

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