Analytical perspectives on index numbers: Advancement and applications

Index Number is a novel invention to measure any variable with or without proper expression in terms of quantification. It is more often thought of applying on measuring growth rates and percentage changes over time with a special reference to economic issues on prices and quantities. However, this Index Number approach was gradually applied to all those variables that are capable of scientific inquiry on rational phenomena irrespective of the fact that they are qualitative or quantitative. Attempt in this note is not to delve into statistical and econometric methodologies and assumptions regarding the very construction of index numbers. It is to give a brief review on analytical evolution and advancement in the application of index numbers and to bring out some important practical lacunae that most of the data generating agencies are facing on regular basis. Particularly, in the Indian context, it can be noted that despite all the limitations that India inherited over time, the Indian statistical system continued to produce fairly reliable and timely data.