Base year for Index used to calculate govt staff’s DA revised

The government has revised the base year for calculating the Consumer Price Index for Industrial Worker (CPI-IW) from 2001 to 2016 to reflect latest consumption patterns

Inflation based on the Consumer Price Index (CPI) stood at 3.15% in July and 3.69% in August 2018. The previous high was 3.38% in October 2018.
The labour ministry said the weight of items like health, education, transport, housing and communication in the budget of the working class has increased drastically. Credit: iStock

The government has revised the base year for calculating the Consumer Price Index for Industrial Worker (CPI-IW) from 2001 to 2016.

The revision has been done to reflect the latest consumption patterns of the working class, the Union Labour Minister said in a statement.

The index forms the basis for calculating the dearness allowance for government employees and workers in the industrial sectors. It is also used to fix the minimum wages in scheduled employments and to measure retail price inflation.

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Explaining the reasons for the revision, the labour ministry said that the weight of expenditure on food and beverages in the budget of the working class has declined. At the same time, the weight of miscellaneous items, like health, education, transport, housing and communication has increased drastically.

The new base year will help measure better the macroeconomic indicators of the Indian economy, labour minister Santosh Kumar Gangwar while addressing mediapersons. The new method takes the index up to international standards and it can be used for comparing at the global level, he said.

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According to the International Labour Organisation (ILO), Index Review Committee (IRC) and National Statistical Commission (NSC), the base year of price index numbers should be revised at least once in 10 years to reflect changes in consumption pattern.

The first base year was in 1944. It was the revised to 1949, 1960, 1982 and to 2001, before the latest revision to 2011.

 

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