Core Issue
The measurement framework of inflation in India is also undergoing a process of recalibration where Consumer Price Index (CPI) base year 2012 was changed to 2024 to say the prevailing consumption realities.
- Constitutional: Welfare targeting and evidence based policymaking.
- Economic: Measuring inflation, transmission of monetary policy.
- Social: Cost-of-living perception and official data.
- International: Like inflation indicators & world credibility.
Problem Statement – A mismatch between official inflation data and household inflation experience takes place because of outdated CPI base year.
Why in News
January 2026 CPI will be issued using a new base year (2024) and updated weights using HCES 2023-24.
The last value that was below the base year of 2012 was December 2025 CPI (1.33%).
Static + Current Linkage
Measures of Inflation and Index Numbers.
Revision of the base year considering current consumption data in CPI.
Polity: Article 266 & 282 (Indirect linkage) -Public spending, subsidies, delivery of welfare rely on correct inflation data.
Economy: Inflation targeting, real income, purchasing power parity.
International Relations/ Convention / Practice: Price indices to be revised periodically according to IMF-suggested base year.
Judiciary: Case Law: There is no direct case but the indices of inflation are used in the determination of wages, in cases of DA, and adjustment of economic cases.
Institution: Reserve Bank of India- the nominal anchor of monetary policy in use is CPI.
Key Arguments (Bullet Memory Points)
Argument 1 → Impact
The CPI (2012 base) is a low inflation indicator to households.
Misfits policy (interest rates, welfare indexation).
Argument 2 → Risk
The monetary policy, which is founded on altered figures jeopardizes timely tightening / loosening.
Gulf between official statistics and perception of people increases.
Argument 3 → Opportunity
New CPI (2024 base) helps to adjust the data on inflation to the current consumption trends.
Enhances focused subsidies, revision of the DAs, estimation of poverty.
Government Side vs Critics
Government says:
CPI revising is a guarantee of methodological strength and international best practice.
New weights, 202324, of HCES are reflective of real consumption.
Critics say:
Years of delay in revision undermined policy response.
Trust was lost to perception gap (1.33% vs ~6-8% felt inflation).
PYQ CONNECTION
UPSC GS-III:
What is the importance of regular revising of price indices to the monetary policy and welfare governance?
MCQs (Practice)
Q1. The purpose of revising CPI base year is mostly to:
A. Decrease artificially induced inflation.
B. Reduce financial deficit levels.
C. Reflect the contemporary consumption tendencies.
D. Control food prices
✅ Answer: C
MAINS ANSWER
Intro:
Monetary policy, welfare targeting, and real household cost-of-living conditions can only be measured accurately using inflation.
Body :
To start with, the CPI based on 2012 did not reflect the changing consumption patterns, subsidy systems, and services inflation, and thus, there was distortion in data. Second, the use of such data in policy undermined the transmission of information and the perception divide because the household reported much higher inflation expectations than the authorities. The structure biases are corrected by revising the base year to 2024 with the help of HCES 202324 and enhances the economic governance.
Conclusion:
Realistic CPI enhances credibility, enhances policy making and brings the inflation control to the economic realities experienced by the citizens.
Memory Hack – Mnemonics
PROBLEM = B.A.S.E
- B – Basket outdated
- A – Aggregation distortion
- S – Subsidy impact ignored
- E – Expectation mismatch
SOLUTION = W.E.I.G.H.T
- W – Updated weights
- E – Evidence-based policy
- I – Inflation credibility
- G – Growth-policy sync
- H – Household reality
- T – Timely revision
10-SEC REVISION BOX
Issue: Outdated CPI base year
Cause: Old consumption weights (2012).
Solution: CPI 2024 base using HCES 2023–24
Impact: Better policy, trust, inflation targeting.
FAQ
Q1. India CPI ka base year kyun change kiya ja raha hai?
India CPI ka base year isliye change kiya ja raha hai taaki inflation calculation aaj ke real consumption patterns ko reflect kare. 2012 ke data par based CPI aaj ke price pressure ko sahi se capture nahi kar pa raha tha.
Q2. CPI ka naya base year kaunsa hoga?
India ka Consumer Price Index (CPI) ab 2024 base year par calculate kiya jayega, jo pehle ke 2012 base year ko replace karega.
Q3. CPI ke weights revise karne ke liye kaunsa survey use hua hai?
CPI ke naye weights Household Consumption Expenditure Survey (HCES) 2023–24 par based hain, jo households ke actual kharch patterns ko dikhata hai.
Q4. CPI base year revision UPSC aur competitive exams ke liye kyun important hai?
CPI revision inflation targeting, RBI monetary policy, welfare schemes, DA revision aur poverty estimation se directly linked hai, isliye UPSC GS-III aur State PSC exams ke liye important hai.
Q5. Kya CPI revision se inflation kam dikhaya ja sakta hai?
CPI revision ka objective inflation ko kam ya zyada dikhana nahi hota, balki inflation ko accurately measure karna hota hai taaki policy decisions realistic data par based ho.
ATTRIBUTION
Analysis based on The Hindu Editorial “Consumer Price Index and a new base year” (15 Jan 2026)
Original Source: The Hindu
Educational purpose only | Copyright © The Hindu
Disclaimer:
This content is an independent academic analysis for educational purposes. The original editorial content belongs to The Hindu. No copyright infringement intended.
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