Base year of Consumer Price Index for Industrial Workers revised from 2001 to 2016

New series not to affect DA given to govt staff for now.

Updated - October 22, 2020 11:13 pm IST

Published - October 22, 2020 02:16 pm IST - NEW DELHI

Labour and Employment Minister Santosh Kumar Gangwar
releasing CPI(IW) series in New Delhi on Thursday. Photo: Twitter

Labour and Employment Minister Santosh Kumar Gangwar releasing CPI(IW) series in New Delhi on Thursday. Photo: Twitter

The Labour and Employment Ministry on Thursday revised the base year of the Consumer Price Index for Industrial Workers (CPI-IW) from 2001 to 2016 to reflect the changing consumption pattern, giving more weightage to spending on health, education, recreation and other miscellaneous expenses, while reducing the weight of food and beverages. 

Labour Bureau Director General D.P.S. Negi said the new series would not have an impact on the dearness allowance (DA) given to government employees for now. The linking factor of the new series to the old series was 2.88, something which employer federations had raised in consultations. 

Speaking at the launch of the new series, Labour and Employment Minister Santosh Kumar Gangwar said the Bureau was expected to bring out the new series of the CPI for agriculture workers, which currently has the base year of 1986-87) by August next. 

Every five years plan

Labour and Employment Secretary Apurva Chandra said that in the future, the Bureau would work towards revising the index every five years. The reduction in weight to spending on food and beverages indicated an increase in disposable income. 

Mr. Gangwar said the new series, representing the latest consumption pattern, would be in the interest of workers. The number of centres, markets and the sample size for working class family income and expenditure survey were all increased. 

The Minister also released the first index, with 2016 as the base year. The index for September, calculated for 88 centres as opposed to the previous 78 centres, was 118. 

The sample size was increased from 41,040 families to 48,384, and the number of selected markets for collecting retail price data from 289 to 317. 

A Ministry statement said, “The number of items directly retained in the index basket has increased to 463 items as against 392 items in the 2001 series...The weight of food and beverages has declined over time whereas the weight of miscellaneous group (health; education and recreation; transport and communication; personal care and effects; household goods and services etc.) has increased substantially under 2016 series vis-à-vis earlier series. The weight of housing group has reported an increasing share over period of time”. 

The weight to food and beverage was reduced from 46.2% to 39%, while spending on housing increased from 15.2% to 17%. 

The index for October would be released on November 27. Apart from measuring inflation in retail prices, the CPI-IW was used to regulate the DA of government employees and industrial workers, as well as fixing and revising minimum wages in scheduled employments, the statement said.

Before the latest revision, the series was revised from 1944 to 1949;1949 to 1960; 1960 to 1982 and 1982 to 2001, it added.

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