Govt housing likely to be excluded from new retail inflation measure

“It was shared with us as a suggestion earlier also. Housing inflation segment needs to be reflective of the on-ground changes in rentals and housing prices and it has been felt that by including only privately-rented dwellings, it may present a better picture,” an official told The Indian Express.

Overall, the housing segment in retail inflation carries a weight of 10.07 per cent in the CPI. Government-provided dwellings are a subset of the housing segment. Rural inflation does not have any weightage for housing and thus, the entire weight is attributable for urban areas.

The proposed revision to the housing index is part of a series of measures being planned to be incorporated in the new inflation series. The Ministry is also separately working on the revision of the base year for GDP, for which it has internally set a target date of February 2026.

At present, a total of 13,368 dwelling units of different types, covering 310 towns, are in the sample for collection of rent data for inflation. House rent index is compiled for two categories of dwellings: rented dwellings (includes employer provided dwellings) and owner occupied/self-owned dwellings.

Among the other suggestions that came out after the discussions held with forecasters and economists included the need to conduct frequent Household Consumption Expenditure Surveys to ensure frequent base revision of CPI and other macroeconomic indicators.

The Ministry also discussed the need for emphasis on the spatial dimension of GDP by disaggregating it in terms like urban /rural, district domestic product etc. The discussions also focused on the need to reduce discrepancy in estimation of GDP from two approaches along with noting the need for better coverage of services in the revised series of CPI.