UPSC Prelims 2002 Q59: Indian Economy – Inflation & Price Indices
With reference to the Wholesale Price Index (WPI), consider the following statements:
1. The new WPI series with base 1993 - 94 = 100 became effective from April 1998.
2. In the new WPI series, the weight for primary articles has gone down by 10 percentage points.
3. The weight for electricity has increased in the new WPI series.
Which of these statements are correct?
- (a) 1, 2 and 3
- (b) 2 and 3
- (c) 1 and 3
- (d) 1 and 2
Answer: (b) 2 and 3
Explanation
Wholesale Price Index: the new 1993-94 series
| Statement | Verdict |
|---|---|
| 1. The new series (base 1993-94 = 100) became effective from April 1998 | False — the 1993-94 series was brought into use in April 2000 |
| 2. The weight of primary articles has gone down by 10 percentage points | True — from about 32 to about 22 per cent |
| 3. The weight of electricity has increased | True — about 5.5 per cent in the new series |
| Combination | Only statements 2 and 3 hold |
The WPI base was shifted from 1981-82 to 1993-94 and the new series was released in 2000. The weight of primary articles fell from about 32 to 22 per cent, and electricity gained weight. Note: the bank text of statement 2 was garbled and has been restored to the original wording; the stored key (b) is correct.
Answer: (b) 2 and 3.
Why each option is right or wrong
- (a) Incorrect. Statement 1 gives the wrong date.
- (b) CORRECT. Statements 2 and 3 are true.
- (c) Incorrect. It includes the wrongly dated statement 1.
- (d) Incorrect. It includes the wrongly dated statement 1 and omits statement 3.
Key point
WPI bases: 1952-53, 1961-62, 1970-71, 1981-82, 1993-94, 2004-05, 2011-12; weights: primary, fuel, manufactured.
Remember
WPI (1993-94 = 100) came into use in April 2000.
Common mistakes
- Accepting the April 1998 date without checking.
- Forgetting the fall in the primary articles weight.
- Mixing the WPI base years with those of the CPI series.
Exam tip
Date claims are the usual trap; the two weight statements are the safe ones.
Sources
- Office of the Economic Adviser — WPI series
- Economic Survey 2001-02