Cassettes and dung cakes for policy.

"When was the last time you hopped on to a horse cart? Or bought video cassettes to watch movies, enjoyed a boat ride, used dung cakes to cook? If the answer eludes you, then the retail inflation gauge, comprising 299 items, including scores of such 'outdated' goods and services with inflated weight, is no longer a true barometer of price pressure in the economy," wrote Banikinkar Pattanayak. Economists have advised revision of the items that make up the consumer price index (CPI) but the government ignored their advice. "Household (HH) consumption pattern has changed," which is "reflected in a sharp fall in the share of food items by about 10.8 and 9.6 percentile points (pp) to 48.6% and 38.5% in rural and urban India respectively over the last decade," wrote Sachchidanand Shukla. This is likely to over or underestimate CPI inflation and lead to faulty monetary policy. Why is the government not updating the CPI list when in 2018, "The government...lowered the GDP growth rates for a majority of the previous 10 years of the UPA regime" by changing the base year from 2004-05 to 2011-12 "to downgrade the GDP growth from 2005-06 to 2011-12", DNA. This was controversial because it used the ministry of corporate affairs (MCA) database to calculate the back series but the database is not available before 2006-07, as acknowledged by the Central Statistical Office (CSO) which said, "In certain cases, owing to the limitations of the availability of data, either splicing method or ratios observed in the estimates in base year 2011-12 have been applied," HT. So, it was partly guesswork. Suspicion was further aroused because growth was falling from 8.1% in Q4 of FY18 (1 Jan-31 Mar 2018) to 5% in Q1 of FY20 (1 Apr-30 Jun 2019) so that economists in India and abroad expressed concern about the quality of data and political interference in interpretation, BT. In January 2019, Acting Chairman of the National Statistical Commission (NSC), PC Mohanan and member of NSC, J Meenakshi resigned because the government suppressed jobs numbers showing that "India's unemployment rate in the year ending June 2018 rose to 6.1 percent, its highest level in at least 45 years", NDTV. So why is the government uninterested in updating the CPI list? It is possible that, since items like video cassettes, dung cakes and tongas are no longer used their prices remain constant and thus drag the CPI inflation rate down. Why conceal inflation? Because high inflation rates raise "the nominal GDP numbers, improve tax collections (at least in nominal terms) and bring down the debt to GDP ratio (by inflating the denominator)", wrote Pramit Bhattacharya. Maybe, that is why RBI Governor Shaktikanta Das is confident that inflation will come down to 4.5% from above 6% now, Mint. Since no one can find out.