Govt releases new series of retail inflation for industrial workers with 2016 base year

By: |
October 23, 2020 4:15 AM

The government on Thursday launched a new series for Consumer Price Index — Industrial Workers (CPI-IW) changing the base year to 2016 from 2001, but said it will not have any immediate impact on the dearness allowance (DA) paid to government employees.

Having said that, though, there appears to be some reasonably strong support (technically) at 74.50, and then 75.The CPI-IW is primarily used to regulate the dearness allowance of government employees and the workers in the industrial sectors.

The government on Thursday launched a new series for Consumer Price Index — Industrial Workers (CPI-IW) changing the base year to 2016 from 2001, but said it will not have any immediate impact on the dearness allowance (DA) paid to government employees.

The CPI-IW is primarily used to regulate the dearness allowance of government employees and the workers in the industrial sectors. It is also used in the determination and revision of minimum wages in scheduled employments.
The CPI-IW (2016=100) series replaces the CPI-IW (2001=100) series. The new series is more representative in character and reflects the latest consumption pattern of the industrial workers, said labour minister Santosh Kumar Gangwar.

The group level weights under new series has changed in comparison to earlier series of 2001. Food & beverages will get 39.17% weight in the new series in comparison to 46.2% in the 2001 series. On the other hand, weight on housing will go up to 16.87% from 15.27% in the earlier series.

DPS Negi, director general, Labour Bureau, said that the linking factor of new series 2016=100 to old series of CPI-IW (2001=100) is 2.88. The CPI-IW for the month of September, 2020, under the new series stood at 118; while under the 2001 base, the CPI-IW for August, 2020 was 338. Hence, there will be no immediate change in the DA as using the linking factor, the CPI-IW for August would have come at 117.4.

Labour Bureau, a unit of the labour ministry, has been compiling and releasing CPI-IW numbers since its inception in 1946. The base year for inflation gauges is typically changed from time to time to capture the complex churnings in the economy.

In the new series, the number of selected markets for collection of retail price data has also been increased to 317 markets under the 2016 series as against 289 markets covered in the 2001 series. The number of centres covered has also been increased to 88 from 78 earlier. The coverage of workers has also been increased from 41,040 in 2001 series to 48,384 in the new series. Labour secretary Apurva Chandra said base year will now be changed every five years.

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