is more than mean plus / minus 1. 5 standard deviation over mean price change. trimmed mean : the trimmed mean procedure estimate price change of each commodities, arrange them in increasing order, calculate cumulative weight of the series and cut the commodities for which cumulative weight is less than 8 per cent or greater than 92 per cent. median : this procedure computes price change for all the commodities, arrange them in ascending order, calculate cumulative weight of the new series and take the inflation of the first commodity for which cumulative weight is greater than or equal to 50 per cent. reweighting : in this method, we compute price change, calculate standard deviation of price change for wpi - all commodities as well as each commodities over a period of time, calculate historical standard deviation for each commodity as the difference between wpi - all commodities standard deviation and standard deviation of that commodity. then, we calculate final weight as the reciprocal of historical standard deviation, multiplied by initial weight. * and * * indicate that the core inflation standard deviation is lower and significantly different from the standard deviation of headline inflation at 1 % and 5 % level of significance, respectively. iii. way forward 22. the divergence between alternative inflation measures complicates the conduct of monetary policy in india. accordingly, the reserve bank looks at all the measures of inflation, both overall and disaggregated components, in conjunction with other economic and financial indicators, to assess the underlying inflationary conditions. as indicated by governor dr. subbarao, “ the reserve bank has been constantly engaged in the refinements of the various price indices and would continue to provide the necessary support to the government to bring about further improvements in the measurement of inflationary conditions ”. 23. in the context of monetary policy formulation, it is important to have a robust primary measure of inflation at the national level. in this direction, the compilation of cpi ( urban ) and cpi ( rural ) could pave the way for a representative cpi for the country. there is also a need to augment the new series of wpi with a service price index to improve its overall coverage. in addition, it would be desirable to initiate steps to develop a producer price index ( ppi ) for the country. moreover, the representativeness of the various price indices could be enhanced by frequent updation of the base year so that it reflects the structural change in the economy. thank you. references barman, r. b. and a. k. nag (

have to conform to international standards, norms and best practices, on certain other issues the regulations will have to be designed using national discretion and consciously be different from such standards and norms. enlightened self interest will have to be the guide post. in the indian context, our past experience of and learnings from such deviations are our additional guide posts. reserve bank is ever conscious of this position. 45. thank you. references : functions and working : reserve bank of india, a publication by the reserve bank of india ( 2001 edition ) a. g. karkhanis, k. a. najmi & vishakha bhagvat : india - – banking regulation - an article in global legal insights ( first edition ). bis central bankers ’ speeches