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India Scraps WPI for PPI in Government Procurement Contracts
The shift to the Producer Price Index changes how the government indexes long-term contracts, with ministries told to adopt the new metric immediately.
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The government will use the Producer Price Index instead of the Wholesale Price Index in all new procurement contracts and price-adjustment clauses. Ministries have been directed to incorporate the PPI into future agreements, according to a directive.
The switch changes how the government indexes long-term contracts for goods and services. The WPI tracked prices at the wholesale stage. The PPI covers both goods and services, capturing price changes at the producer level before they reach consumers. The PPI's broader coverage could reduce the volatility that sometimes appeared in WPI-linked contracts, especially during commodity price spikes.