Discussion paper highlights proposed changes in housing index compilation methodology in new CPI series

The Ministry of Statistics and Programme Implementation (MoSPI) is undertaking the base revision exercise of the Consumer Price Index (CPI). In the process, MoSPI is revisiting methodologies, exploring new data sources and incorporating changes after comprehensive consultations with the experts, academicians, users andother stakeholders. As a part of CPI, Housing constitutes a major component with an expenditure share of 21.67% in urban areas and 10.07% at the All-India level in the current series. Housing is a crucial indicator for the overall well-being of the households not only in India but across the world as a significant amount of their income is spent either on house rent or maintaining an owned house. Therefore, robust and relevant housing index compilation methodology for capturingits actual movement every month is of utmost importance. Based on the feedback received from various stakeholders, experts and global best practices, MoSPI is proposing changes in the existing housing index compilation methodology.

A Discussion Paper on the proposed changes in housing index compilation methodology in the new CPI series is prepared. It provides detailed outlines of the existing methodology and proposed changes for the new series. MoSPI invites views and comments from experts, academicians, Central government Ministries/ departments, State governments, financial institutions and other stakeholders on the proposed housing index compilation methodology. The paper noted that monthly rent data collection in both rural and urban areas as opposed to the current practice of collecting it every six months only for urban areas are proposed to be one of the key changes in the Consumer Price Index (CPI) that will form the basis of the new retail inflation series. In addition to urban expenditure on housing, the HCES (Household Consumption Expenditure Survey) 2023-24 has also captured house rent data for rural areas, including imputed rent for owner-occupied dwellings. Consequently, new series will compile the housing index for both rural and urban sectors. This marks a departure from the current series, which includes only the urban sector, due to the absence of imputed rent data for rural areas in the HCES 2011-12, the discussion paper noted.

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