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LABOUR MINISTRY CHANGES BASE YEAR FOR CPI-IW FROM 2001 TO 2016

LABOUR MINISTRY CHANGES BASE YEAR FOR CPI-IW FROM 2001 TO 2016

Context

The Ministry of Labour for Consumer Price Index-Industrial Workers (CPI-IW) will change the base year for Consumer Price Index (Industrial Workers) from 2001 to 2016, which will give higher weightage to the non-food items (i.e education, health, and housing).

New Series

  • The new series of CPI(IW) with base 2016=100 will replace the series with base 2001=100.
  • The series was also revised during the following years since the inception of the Labour Bureau.
    • 1944 to 1949;
    • 1949 to 1960;
    • 1960 to 1982
    • 1982 to 2001.

Significance

  • It will help in measurements of macroeconomic indicators of the Indian economy
  • The improvements made in it, including international standards and practices, will make it more comparable at the international level.

The CPI-IW

  • It is used primarily for measuring the Dearness Allowance payable to workers.
  • It is used in the organised sector inclusive of banks, PSUs and insurance companies, besides government employees.
  • It also gives inputs to the government in macro policy planning.

The CPI comprises four components at the national level, which are:

  • CPI for Industrial Workers
  • CPI for Agricultural Labourers
  • CPI for Rural Labourers

Rules

  • As per the rules, the base year of price index numbers should be revised at frequent intervals generally not more than 10 years to show the changes that take place in the consumption pattern of consumers.

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