Pointing that the current price indices fails to capture the ground reality, a Parliamentary panel has asked the government to come up with a separate price index for the services sector, which could accurately factor in and reflect the rising costs of different services in the economy, enabling the government to tailor their policy responses accordingly. Further, the panel added that sectoral regulators need better data on prices, production and quality of services to act in the consumer interest.
The Parliamentary panel said that although services account for around 60 per cent of the country's economy, they are neither captured fully by the Wholesale Price Index (WPI) based inflation nor the Consumer Price Index (CPI), which reflects the rate of price rise at retail level and noted that in view of service sector contribution to the Indian economy, there is need of accurate data on services inflation to understand relative price movements.
The panel further noted that entertainment, transportation and the like are mostly privatised, and costs may be rising "disproportionately higher" than what is being captured in the CPI or retail inflation. The panel said that sectoral regulators need better data on prices, production and quality of services to act in the consumer interest. It pointed that the Reserve Bank of India has shifted its focus from wholesale prices to retail inflation while determining its monetary policy because WPI did not include services in its basket. However, the rising cost of education, healthcare, entertainment and transportation do not get fully reflected even in CPI.