Finance ministry asks ministries to move from WPI to PPI in future contracts
The finance ministry has asked ministries and departments to adopt the Producer Price Index (PPI) instead of the Wholesale Price Index (WPI) for price escalation clauses in future government contracts once PPI becomes available. The move follows the launch of monthly PPI data and aligns with international practices and IMF recommendations.
The finance ministry has instructed all ministries and departments to switch to Producer Price Index (PPI) from the current Wholesale Price Index (WPI) for rate escalation and adjustment clauses in future government procurement contracts. The Department of Expenditure has emphasized that PPI is a more internationally recognized index compared to WPI, which is currently used in government contracts to define price escalation.
The commerce ministry has recently started issuing monthly PPI data for both goods and services since June, aiming to better reflect price movements at the producer level and eventually phase out wholesale price inflation numbers within the next five years.
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