Importance of Index Numbers:

Index Numbers have a great importance in Statistics.
They are used in the various fields of economics. Such as production, consumption, Price etc

With the help of Statistics, economic conditions can be studied and forecast can be made. They are called the “Economic Barometer” Their importance can be judged with the following facts.

1. Calculation of Price levels:
Index Numbers help in calculating levels of various items.

2. Helpful in taking decisions:
Index numbers are very helpful of Government in taking important decisions, such as granting dearness allowances to the employees.

3. Helpful in comparative Study:
They also help us in making comparative study of the changes occurring in the economy.

4. Helpful do insurance companies and Banking Institution. Index numbers help the insurance companies and banking institutions in determining of Premium – rates and interests respectively.

5. Helpful in assesing the development of an economy with the help of statistics, the development of an economy can be assessed.