Discuss the rationale behind periodic revision of CPI base year. How does the 2024=100 series improve inflation measurement in India?

Q. Discuss the rationale behind periodic revision of CPI base year. How does the 2024=100 series improve inflation measurement in India? (15 marks, 250-350 words)

The Consumer Price Index (CPI), compiled by the Ministry of Statistics & Programme Implementation (MoSPI), measures retail inflation against a fixed base-year basket. MoSPI's shift from 2012=100 to 2024=100, with the revised series released on 12 February 2026 [1], reflects the statistical necessity of realigning an ageing basket with present-day consumption.

Rationale for periodic base revision - Consumption patterns drift: weights of the old series rested on 2011-12 expenditure data. Over a decade of urbanisation, rising incomes and services growth left services and digital spending under-represented [2]. - Price-relevance of the basket: items lose salience while new ones (streaming, e-commerce purchases) enter household budgets; a stale basket measures a market that no longer exists [2]. - Policy accuracy: CPI is the anchor of the RBI's flexible inflation-targeting framework. A distorted index feeds distorted repo-rate decisions and indexation of wages, pensions and DA [2]. - Statistical convention: keeping the base within roughly a decade is standard practice; the 12-year gap here marks a corrective, not routine, exercise.

Improvements under the 2024=100 series - Updated weights: basket and weights drawn from the Household Consumption Expenditure Survey (HCES) 2023-24, replacing 2011-12 data [2]. - Wider basket: expanded to 358 items at the All-India level, capturing new-economy consumption [2]. - International comparability: adoption of COICOP 2018 classification aligns India's methodology with global statistical standards [2]. - Deeper price collection: monthly collection now spans 1,465 rural and 1,395 urban markets across 434 towns [1]. - Digital coverage: 12 online markets in towns above 25 lakh population added — a first — to track e-commerce prices [1]. - Continuity preserved: linking factors and back-series data (2013–2024) maintain comparability with the old series [1]. The first print under the new base showed January 2026 inflation at 2.75% [2].

A credible price index is public infrastructure for monetary and welfare policy alike. Sustaining this gain requires institutionalising timely base revisions and regular consumption surveys, so that measured inflation continues to mirror the household's actual basket.

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Sources: 1. MoSPI revised base year of the Consumer Price Index from 2012=100 to 2024=100 — PIB — release date 12 February 2026; 1,465 rural and 1,395 urban markets across 434 towns; 12 online markets; linking factors and back series 2. Frequently Asked Questions (FAQs) on CPI 2024 Series, MoSPI — HCES 2023-24 weights, COICOP 2018, 358-item basket, monetary-policy relevance, January 2026 inflation at 2.75%