The National Housing Bank (NHB), the government's apex housing refinance institution, has launched India's first housing price index that will track fluctuations in the property market and collect data on the parallel black economy.

The data is expected to form the basis for policy decisions such as rationalising stamp duty, capital gains tax, municipal tax and determining mortgage rates.

Called the NHB RESIDEX, the index was launched by Finance Minister P Chidambaram today. "We want to know the gap between the documented price and the actual transacted price. We will question why this gap exists and what needs to be done to reduce it," said RV Verma, executive director and chief vigilance officer, NHB.

While NHB has so far created just an aggregate index, it will refine this model to create indices for low-, middle and high-income houses. The NHB will arrive at a median and the standard deviations from it.

A pilot index has been developed for five cities � Delhi, Bangalore, Bhopal, Kolkata and Mumbai � for five years from 2001 to 2005 and is comparable with inflation (see chart). Initially, NHB will bring out the index for these cities every six months.

In the next phase, NHB proposes to compile the indices for 35 cities with a population of over a million and will subsequently cover 63 cities under the Jawaharlal Nehru National Urban Renewal Mission.