Stats ministry plans fresh look at CPI housing gauge, seeks public feedback

Housing is an important component of the CPI series as it has a weightage of 21.67 per cent in urban areas and 10.07 per cent at the all-India level in the current series

The exclusion of employer-provided accommodation, monthly collection of housing rental data, and extension of price survey coverage to include rural areas — these are among the changes proposed in the methodology used to compile the housing index, in a bid to better capture housing inflation in the country.

 

The proposed changes, put forward by the Ministry of Statistics and Programme Implementation in a discussion paper released on Thursday, are part of the ongoing base-year revision exercise for the Consumer Price Index (CPI).

 

The discussion paper, open for public consultation until November 20, aims to make the measure more accurate and representative of household spending.

 

Housing is a key component of the CPI series, with a weight of 21.67 per cent in urban areas and 10.07 per cent at the all-India level in the current series.

 

“Housing is a crucial indicator of the overall well-being of households, as a significant share of income is spent either on house rent or maintaining an owned house. It affects household budgets and can strain finances, which may in turn reduce spending on other requisite goods and services. Therefore, inflation based on the house rent index is an important tool not only for policymakers and decision-makers but also for households,” the discussion paper read. 

 

At present, housing rental data is collected every six months. The inclusion of employer-provided accommodation in the housing index also causes distortions, as rent or housing allowance is determined by the occupant’s rank rather than by market-based demand and supply forces.

 

Similarly, the current housing index excludes rural areas because the Household Consumption Expenditure Survey 2011-12 — which underpins the current series — did not provide estimates of imputed rent for owner-occupied houses in rural areas. Moreover, actual house rent expenditure accounted for only 0.44 per cent of total rural consumption expenditure.

 

The discussion paper also proposes using Census 2011 data to assign weights to each dwelling or accommodation category, instead of relying on the housing condition survey conducted by the National Statistics Office during its 69th round. However, there will be no change in how dwellings are categorised — they will continue to be classified based on the number of living rooms.

 

“In the ongoing base revision exercise, all aspects of index compilation methodology are being revisited to prepare a more robust and resilient CPI series. To address issues highlighted by users and experts, the housing index compilation methodology is proposed to be revised significantly,” the paper observed. 

Proposed changes

• Exclusion of employer-provided accommodations
• Exclusion of monthly collection of housing rental data
• Extension of price survey coverage to include rural areas

 

Aim: To capture better housing inflation in the country 

• The discussion paper is open for public consultations till November 20