Labour Bureau Plans to Revise CPI-IW Base Year, Expand Coverage to 130 Centres

The Labour Bureau is preparing to revise the base year of the Consumer Price Index for Industrial Workers (CPI-IW), as per news reports. The proposed exercise includes expanding coverage from 88 to 130 centres and adding the construction sector. 

The revision will also examine changes in household spending patterns and introduce technology-based methods of collecting and verifying prices. The new base year is yet to be finalised, according to a Business Standard report. 

Construction Sector Back in Focus 

The existing CPI-IW series is based on 2016=100 and has been in use since September 2020. It covers seven sectors, including factories, mines, plantations, railways, public motor transport, electricity and ports. 

Construction was examined during the previous revision through pilot surveys involving construction and handloom workers. However, it was not included in the final index.  

The Labour Bureau is now considering its inclusion alongside the proposed expansion in the number of centres. 

Consumption Basket Faces a Fresh Review 

The composition of the index depends on household expenditure patterns. The Labour Bureau has therefore approached the National Statistical Office (NSO) to allocate a time slot for the Working-Class Family Income and Expenditure Survey, which will provide data for assigning weights to different items. 

Online services, OTT subscriptions and other emerging consumption categories are among the additions under consideration. The bureau is also examining alignment with the international COICOP 2018 classification. 

Digital Price Collection Under Consideration 

The proposed methods include mobile and computer-based price collection, geo-tagging and time-stamping of entries. The bureau is also looking at e-commerce prices and AI-based tools to identify unusual price movements and inconsistencies. 

Making anonymised household expenditure data available to researchers is another proposal being examined. 

CPI-IW's Role in Wage Calculations 

CPI-IW is used to calculate dearness allowance for central and state government employees and organised-sector workers.  

It also serves as a reference for variable dearness allowance, minimum wage revisions and price escalation clauses in contracts. 

Read More: Government Notifies National Social Security Board for Gig, Platform and Unorganised Workers! 

Conclusion 

The proposed changes could alter both the coverage and calculation of the industrial workers' inflation index. The final framework will become clearer once the Labour Bureau settles the base year and completes its consultations with stakeholders. 

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