Even as the Department of Industrial Policy and Promotion, in the ministry of commerce and industry, is finalising a mechanism to release monthly inflation data based on the new wholesale price index data series, it is facing problems in sourcing price quotations from factories and manufacturers.

The industry department had planned to get 10,000 price quotations from producers in order to have a new-look WPI, which incorporates a better snapshot of the economy.

Out of this, 8,000 products are manufactured items. However, it now emerges that the DIPP may get price quotations from only 6,400 industrial units and factories.

"The DIPP had outsourced the work of collection price data between 2004-05 and July 2008 to the National Sample Survey Organisation, which has not been able to collect price quotations from 20 per cent of the nearly 8,000 manufacturing units and factories. This could be on account of the units being closed or being based in remote locations," said a source.

India's Chief Statistician Pronab Sen says even a lower price sample should not be a problem in coming out with a new-look WPI.

"Even if we do not get 20 per cent of the price quotations, 80 per cent of the original 8,000 price quotes proposed should be sufficient for coming out with a new WPI," Sen told Business Standard.

Government sources added that of the 6,400 price points, data has been flowing in from 3,000 to 4,000 industrial units at the moment.

"The industry department expects this to improve when the index is in place. The problem is that it is not mandatory for the industrial units to send data," a source said.

This problem of industrial units not sending data is likely to be addressed by the Collection of Statistics Bill, 2007. When approved by Parliament, this piece of legislation will make it mandatory for industries and other producers to provide statistical data to the government.

"DIPP officers, who went to Australia to study the mechanism of inflation-data collection, found that submission of data is mandatory (over there).

"This ensures that the index maps the economy through better reporting of statistical data," the source added.

The new-look WPI will monitor prices of nearly 1,200 products, as against 435 items currently for which nearly 2,000 price quotations are sourced. Moreover, the data is proposed to be released every month as against the present practice of releasing it every Thursday.

A committee headed by Planning Commission member Abhijit Sen was given the task of preparing the new WPI series. The new reporting frequency of the WPI will also be accompanied a change in the base from 2004-05 instead of 1993-94 at present.