{"id":71310,"date":"2025-10-31T11:30:29","date_gmt":"2025-10-31T06:00:29","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=71310"},"modified":"2025-10-31T11:30:29","modified_gmt":"2025-10-31T06:00:29","slug":"mospi-proposes-overhaul-in-cpi-housing-index","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/mospi-proposes-overhaul-in-cpi-housing-index\/","title":{"rendered":"MoSPI Proposes Overhaul in CPI Housing Index"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><b>CPI Housing Index Latest News<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Ministry of Statistics and Programme Implementation (<\/span><b>MoSPI<\/b><span style=\"font-weight: 400;\">) has proposed <\/span><b>key methodological reforms<\/b><span style=\"font-weight: 400;\"> in the Consumer Price Index (<\/span><b>CPI<\/b><span style=\"font-weight: 400;\">), specifically in the <\/span><b>compilation of the housing index<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These reforms <\/span><b>aim to make inflation measurement more accurate<\/b><span style=\"font-weight: 400;\">, representative, and transparent, reflecting post-pandemic changes in rental markets and including rural housing data for the first time.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Background &#8211; CPI and Housing Index<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>The Consumer Price Index (CPI)<\/b><span style=\"font-weight: 400;\"> is India\u2019s main measure of <\/span><b>retail inflation<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The MoSPI is revising the CPI base year <\/span><b>to 2024 from 2012<\/b><span style=\"font-weight: 400;\">, with item weights based on the <\/span><b>2023-24<\/b> <b>Household Consumption Expenditure Survey (HCES)<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currently, <\/span><b>housing data<\/b><span style=\"font-weight: 400;\"> is collected biannually and only for urban areas.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>The weight of housing<\/b><span style=\"font-weight: 400;\"> in the CPI basket is 21.67% for urban areas and 10.07% at the all-India level.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">According to data released last month, <\/span><b>housing inflation accelerated to 3.98%<\/b><span style=\"font-weight: 400;\"> in September from 3.09% in August. Overall, India&#8217;s retail inflation eased to 1.5% from 2.1% over the same period.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Economists have long <\/span><b>criticized <\/b><span style=\"font-weight: 400;\">the inclusion of <\/span><b>employer-provided dwellings<\/b><span style=\"font-weight: 400;\"> and use of House Rent Allowance (HRA) as a rent proxy.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Proposed Methodological Changes<\/b><\/h2>\n<ul>\n<li><b>Monthly rent data collection:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Rent data will be collected <\/span><b>monthly <\/b><span style=\"font-weight: 400;\">instead of every six months.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Coverage expanded to <\/span><b>both rural and urban areas<\/b><span style=\"font-weight: 400;\">, marking a major shift.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The dwelling type weight will be based on <\/span><b>Census 2011<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li><b>Exclusion of employer-provided housing: <\/b><span style=\"font-weight: 400;\">Government and employer-provided accommodations will be excluded <\/span><b>to avoid distortions<\/b><span style=\"font-weight: 400;\"> since they don\u2019t reflect market transactions.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Expanded sample and IMF guidance:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Rent data to be collected from <\/span><b>all selected dwellings<\/b><span style=\"font-weight: 400;\"> every month (earlier one-sixth sample).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">International Monetary Fund (IMF) technical experts recommended refining India\u2019s panel approach to improve representativeness.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The revised formula ensures \u201c<\/span><b>like-for-like<\/b><span style=\"font-weight: 400;\">\u201d comparison and avoids downward bias in rent index computation.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Inclusion of Rural Sector through HCES 2023-24<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>HCES<\/b><span style=\"font-weight: 400;\"> 2023-24 has, for the first time, captured rural house rent and imputed rent for owner-occupied dwellings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This enables <\/span><b>compilation of a rural housing index<\/b><span style=\"font-weight: 400;\">, absent in the HCES 2011-12 series.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The new series will therefore represent <\/span><b>comprehensive national housing dynamics<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Transparency and Consultation Process<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MoSPI released the third discussion paper as part of its base revision exercise of the CPI. Previous papers focused on \u2018Treatment of Free Public Distribution System (PDS) Items in CPI Compilation\u2019.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Ministry plans to hold data conferences and stakeholder consultations to <\/span><b>enhance transparency and inclusiveness<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Feedback on the housing index changes <\/b><span style=\"font-weight: 400;\">has been invited till November 20, 2025.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Way Forward<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The proposed CPI revision will align India\u2019s methodology with <\/span><b>global statistical best practices.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Continuous data collection from rural and urban areas will <\/span><b>improve the robustness of inflation measurement.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Exclusion of non-market housing will <\/span><b>enhance accuracy<\/b><span style=\"font-weight: 400;\"> in assessing true inflationary pressures.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The exercise will also help policy-makers, RBI, and households<\/span><b> better understand the impact of housing costs on inflation and real income<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Conclusion<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The overhaul of the housing index methodology marks <\/span><b>a significant reform in India\u2019s CPI framework.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By integrating monthly, all-India rent data and removing distortionary elements, MoSPI aims to create <\/span><b>a more representative and credible inflation index.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This reform is crucial in the context of post-pandemic rental surges, rural-urban housing disparity, and the need for data-driven economic policymaking in a rapidly evolving economy.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><b>Source: <\/b><a href=\"https:\/\/indianexpress.com\/article\/business\/new-cpi-to-measure-rural-housing-inflation-exclude-employer-provided-dwellings-10336811\/\" target=\"_blank\" rel=\"nofollow noopener\"><b>IE<\/b><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The MoSPI has proposed key methodological reforms in the Consumer Price Index (CPI), specifically in the compilation of the CPI housing index. <\/p>\n","protected":false},"author":19,"featured_media":71324,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[3477],"class_list":{"0":"post-71310","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-cpi-housing-index","9":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/71310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=71310"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/71310\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/71324"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=71310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=71310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=71310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}