New Delhi, Aug. 16 -- The finance ministry has asked government ministries and departments to consider using the Producer Price Index (PPI) instead of the Wholesale Price Index (WPI) for price escalation and rate adjustment clauses in future government procurement contracts.
The Department of Expenditure, in an office memorandum issued on July 13, said ministries and departments should adopt PPI for such clauses once adequate PPI data becomes available.
The move is aimed at bringing government contracting practices in line with a more internationally recognised measure of price changes at the producer level.
Price escalation clauses in government contracts allow payments to be revised when the cost of key inputs changes during the execut...