Q.Explain any four genuine difficulties involved in constructing index numbers.

Constructing an index number involves several real judgement calls, not just a mechanical formula application.

1. Choice of the base year. The base year must be a "normal" year — free of an abnormal boom, slump, war or natural disaster — but genuinely normal years are not always easy to identify with confidence, and a poorly-chosen base distorts every subsequent comparison.
2. Choice of commodities. It is impossible to include every commodity in the economy; a representative, manageable sample must be chosen, and because tastes and consumption patterns change over time, a sample that was representative when first chosen may stop being representative years later.
3. Choice of weights. Deciding how much importance (weight) each commodity or group deserves is a genuine judgement call — Example 5 vs Example 6 above showed that Laspeyres (base-year weights) and Paasche (current-year weights) give visibly different index values on the identical price data, purely because of this choice. …

Listing 'data collection is hard' as the only difficulty — while true, the Maharashtra Board syllabus expects the METHODOLOGICAL difficulties (base year, commodity selection, weights, formula choice) to be named spe …