Wholesale price index and Consumer price index

In India, the Wholesale Price Index has declined during a few months in 2009. But the All India Consumer Price Index has increased during this period. While the baskets of commodities differ in wholesale price index and consumer price index, there are several common items like food items and consumer goods. Why is the decrease in wholesale price index not reflected in the consumer price index? Some of the reasons are the increase in the cost of manpower at retail stage and the increase in transportation charges.

Three years ago, a woman general worker (manual) used to get wages of Rs.40 per day. Petty shop keepers and hawkers were satisfied when they got profit of Rs.50 on their sales in a day. Now women workers are getting around Rs.100 per day. Shop keepers and hawkers are not satisfied if they earn Rs.50 a day as in the past. They want a profit of Rs.125 on their sales in a day. The volume of sales remains more or less same.  If the purchase price of the commodities were Rs.200, the sales price which used to be Rs.240,(200+40)  would have gone up to Rs.325 (200+125) i.e. by about 35%.

When the private sector management was negotiating revision of pay scales of their employees downwards, the government increased the salaries of its employees. The government could have postponed implementation of the 6th pay commission report. Similarly, the government could have avoided increasing minimum wages in different sectors.


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