The Centre is set to revise the base year for the consumer price index for industrial workers (CPI-IW), a move that is likely to benefit millions of government employees, pensioners, and industrial workers.
The base year for the CPI-IW will be changed from 2001 to 2016 to reflect new consumption pattern of recent times. The CPI-IW hasn't been revised since 2001, which ideally should be revised every five years.
The index is used for computing both government staff's dearness allowance (DA), pensioners' dearness relief (DR) as well as industrial workers' salaries.
Union Labour and Employment Minister Santosh Kumar Gangwar is reportedly expected to release the new CPI-IW index, for September 2020, next week. The likely announcement by Gangwar is reportedly expected to lead to a hike in salaries of nearly 30 million industrial workers and 4.8 million central government employees.
The new CPI-IW is likely to focus more on increasing spending on healthcare, education, transport, urban housing, and mobile phone expenses, etc., a government official told the Mint.
"We are revising it in the next few days and it will benefit a cross section of workers and pensioners," Apurva Chandra, the Union labour secretary told the publication.
The revised index will take into consideration data from broad array of industrial centres, from 78 now to around 90, in order to capture the ground realities more precisely.
Meanwhile, the government official stated that although the CPI released by the Ministry of Statistics and Program Implementation (MOSPI) pegged retail inflation at 6.69 per cent in August, and food inflation at more than 9 per cent in the same month, CPI-IW is significantly lower.
According to the latest data, year-on-year inflation (CPI-IW) was 5.63 per cent in August, against 5.33 per cent for July and 6.31 per cent reported in August 2019.