Definition of Index Number :Index numbers are special type average which shows the changes in price and quantity due to changes in time and place . Without calculating index number , we can not make our national plannings . So index number is very important for us. Because index number can gives us clear picture of increasing the prices of any country or decreasing . If index numbers shows that prices are increased from base years more than 20% , then we can start different progressive plannings for safeguarding poor families by giving free food facilities. In calculating index number fisher index number is better than other weighted aggregated indices.
In last we can define that if current year prices divided by previous years prices and multiply with 100 . What will come , we generally called index number . Then we compare this index number with 100 and calculate what is percentage of increasing or decreasing the price.