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january 9, 2016
79
ECONOMIC NOTES
(Index value)
140
16
201314
14
130
GDP deflator
CPI
12
120
201213
10
201415
110
WPI
8
100
6
4
201516
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1
Q2
Q3
Year
Q1
4.5
7.0
6.7
7.0
12.5
12.7
13.4
8.8
7.6
5.3
6.3
1.7
80
Quarter-wise
Q2
Q3
6.3
7.5
8.4
7.4
14.8
14.7
13.6
6.0
8.0
6.7
4.7
-1.3
Q4
5.0
6.4
6.6
4.7
6.7
7.5
13.0
14.8
8.1
12.3
12.2
7.7
7.6
7.9
1.5
7.3
5.1
0.2
Q4
2011-12
2012-13
2013-14
2014-15
2015-16
Quarter
GDP
WPI
CPI
Brent Oil
Deflator (200405=100) (2012=100) Prices
201213 Q1
Q2
Q3
Q4
201314 Q1
Q2
Q3
Q4
201415 Q1
Q2
Q3
Q4
201516 Q1
Q2
Q3$
7.6
8.0
7.6
7.3
5.3
6.7
7.9
5.1
6.3
4.7
1.5
0.2
1.7
-1.3
7.5
7.9
7.3
6.7
4.8
6.6
7.1
5.4
5.8
3.9
0.3
-1.8
-2.3
-4.5
-2.9
9.9
10.0
9.8
9.9
8.8
10.1
10.6
8.2
7.9
6.7
4.1
5.3
5.1
3.9
5.2
-7.6
-3.3
0.6
-5.1
-5.4
0.6
-0.8
-3.8
6.9
-7.7
-50.2
-43.8
-50.7
-39.3
GDP Deflator
1
WPI (200405=100) 0.984
CPI (2012=100)
0.956
Brent Oil Prices
0.926
0.984
1
0.941
0.950
0.956
0.941
1
0.851
0.926
0.950
0.851
1
january 9, 2016
vol li no 2
EPW
ECONOMIC NOTES
based on WPI. Reflecting its conglomerate nature, the GDP deflator always lies
between the WPI and CPI. Differences in
the inflation rate based on these three
different indices showed wide divergence during the last three quarters for
which data are available. The WPI inflation rate has been negative consistently
during the last three quarters going
from -1.8% to -4.5%, whereas CPI inflation rates have remained positive and
showed a marginal fall from 5.3% in the
fourth quarter of 201415 to 3.9% in the
second quarter of the current fiscal. But
the GDP deflator had moved up in the
first quarter of the current fiscal and
then fell to -1.3% in the second quarter.
Given the countrys overwhelming
dependence on imports of crude oil and
petroleum products, the WPI inflation
rate has remained low with declining
international oil prices, more so since the
third quarter of 201415.2 The average
daily crude oil prices that prevailed during OctoberNovember 2015 are 39.3%
less than what prevailed during the same
period the previous year.
In Table 3, we have also appended the
correlation coefficient (r) between the
rates of change in various deflators and
also in crude oil prices for the period from
first quarter of 201213 to second quarter
of 201516. The GDP deflator variations
have a close association with those of
WPI (r=0.984). The inflation rate based on
WPI is also closely associated with rate
of change in crude oil prices (r=0.950).
This suggests that the sharp decline in
oil prices in the third quarter of the
current year would have a favourable
impact on WPI as a whole.3
Deflators and PFCE
The deflators analysed above relate to
output deflators used to estimate GDP in
real terms. When the CSO arrives at GDP
following the expenditure method, it is
done at market prices. The two sets of
GDP estimatesone by the production
method and the other by the expenditure methoddo not generally tally
and produce discrepancies, which get
reflected in the consolidated accounts of
the nation built in the NAS. Those discrepancies arise essentially because of
the differences in deflators used to
Economic & Political Weekly
EPW
january 9, 2016
Q1
Quarter-wise
Q2
Q3
Full
Year
55.9
57.6
57.6
57.7
60.2
55.1
58.2
57.6
57.9
59.1
55.3
57.9
57.2
57.5
57.8
55.5
57.4
56.6
57.0
CPI combined
(Base=2012)
7.0
6.0
5.0
4.0
3.0
Implicit deflator
of PFCE
2.0
Q1
Half-yearly
H1
H2
Q4
(in %)
8.0
1.0
57.3
3.2
6.4
4.7
5.5
5.6
4.6
7.0
6.7
5.8
6.2
201415 6.2
7.1
4.2
7.9
6.6
6.0
6.3
201516 7.4
6.8
7.1
Q2
Q3
201415
2014-15
Q4
Q1
Q2
201516
2015-16
1
2
3
4
5
Fuel and light
6.1.01 Household goods
and services
6.1.02 Health
6.1.03 Transport and communication
6.1.04 Recreation and amusement
6.1.05 Education
6.1.06 Personal care and effects
7
All Groups
6.84
3.8
5.89
8.59
1.68
4.46
3.89
100.0
Sl no*
Item Name
1
2
3
4.1+ 4.2
Share in Total
(201112)
29.17
3.09
6.99
11.36
3.71
12.84
3.54
16.80
3.38
2.68
1.84
95.40
vol li no 2
81
ECONOMIC NOTES
Quarter-wise
Q2
Q3
Q4
Half-yearly
H1
H2
82
Full
Year
32.6 33.6
32.2 31.9
30.8 30.7
29.7 30.0
References
Central Statistics Office (2015a): Changes in
Methodology and Data Sources in the New
Series of National Accounts Base Year 201112,
Ministry of Statistics and Programme Implementation, New Delhi.
(2015b): Quarterly Estimates of Gross Domestic
Product for the Second Quarter (JulySeptember) of 201516, Press Note, 30 November.
Rajakumar, J Dennis and R Krishnaswamy (2015):
Surge in Union Government Revenues:
Indirect Tax Collection Leads Growth, Economic & Political Weekly, Vol 50, No 50,
12 December.
Rajakumar, J Dennis, Vijayata B Sawant and Anita
B Shetty (2015): New Estimates of Saving and
Capital Formation: Larger Numbers in a
Declining Trend, Economic & Political Weekly,
Vol 50, No 12, 21 March.
Method of Deflation
Primary goods
Manufactured products
CPI
Other products
CPI
Services:
Housing, water supply and
miscellaneous services
relating to dwelling
Health services
CPI
Purchase of transport
Implicit price indices of GVO
services and maintenance of
personal transport equipment
Communication
Education
Gas
Kerosene
Firewood
Charcoal
Gobar gas
Notes
37.5 38.9
37.0 36.9
33.6 33.7
32.8 33.1
january 9, 2016
vol li no 2
EPW