scorecardresearch
Follow Us:
Tuesday, November 24, 2020

New retail inflation series for industrial workers: Base year shifted to 2016, no change in dearness allowance

The CPI-IW is mainly used for determining dearness allowance (DA) paid to central/state government employees and workers in the industrial sectors besides fixation and revision of minimum wages in scheduled employments.

By: ENS Economic Bureau | New Delhi | Updated: October 23, 2020 9:39:51 am
The new series also incorporates the changes in the consumption pattern of the working class families since the earlier base year of 2001.

The government on Thursday launched the new series for retail inflation for industrial workers shifting the base year to 2016 from 2001. The government, however, said that dearness allowance, which is linked to the Consumer Price Index for Industrial Workers (CPI-IW), will remain unchanged for now. “As of now, there will be no change in dearness allowance,” Labour Bureau Director General DPS Negi said.

To make the new series comparable with the older one, the Ministry stated that it has to be calculated using a linking factor of 2.88. Taking this into account, the CPI-IW for September is 118, and with linking factor it works out to be 339.8 as against 322 in the corresponding period last year in the earlier series.

The CPI-IW is mainly used for determining dearness allowance (DA) paid to central/state government employees and workers in the industrial sectors besides fixation and revision of minimum wages in scheduled employments.

The new series also incorporates the changes in the consumption pattern of the working class families since the earlier base year of 2001. Under the new series, the weightage for the food group has gone down to 39.17 per cent from 46.2 per cent in the 2001 series, while weight of miscellaneous items, like education and health has risen to 30.31 per cent from 23.26 per cent. The weight of housing and clothing and footwear have changed to 16.87 per cent from 15.27 per cent and to 6.08 per cent from 6.57 per cent.

Weight of fuel and light segment will now have a weight of 5.5 per cent as against 6.43 per cent earlier, while pan, supari, tobacco and intoxicants will hold 2.07 per cent weight as against 2.27 per cent.

In the new 2016 series, 88 centres have been covered as against 78 centres in the 2001 series. The sample size for the conduct of Working-Class Family Income and Expenditure Survey, on the basis of which weighting diagrams have been derived, was increased to 48,384 families from 41,040 in the 2001 series, Labour Minister Santosh Kumar Gangwar said.

The number of selected markets for collection of retail price data has also been increased to 317 under the 2016 series compared to 289 covered in the 2001 series. The number of items directly retained in the index basket has increased to 463 items over 392 items in the old series.

Labour Secretary Apurva Chandra said that it’s been said that the dearness allowance is linked to an outdated index, but hereon, the aim is to keep revising the series every five years.

As per the recommendations of the International Labour Organization (ILO), Index Review Committee (IRC) and National Statistical Commission (NSC), the base year of price index numbers should be revised at frequent intervals, generally not exceeding 10 years to reflect the changes that take place in the consumption pattern of consumers.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

Advertisement
Advertisement
Advertisement
Advertisement