n lation and siness le 7.15
Ta le 7.1
Major Group / Group Weight No. of items No. of Quotations
2004–05 2011–12 2004–05 2011–12 2004–05 2011–12
All Commodities 100.00 100.00 676 697 5482 8331
Primary Articles 20.12 22.62 102 117 579 983
Fuel & Power 14.91 13.15 19 16 72 442
Manufactured Products 64.97 64.23 555 564 4831 6906
consumer Price inDex allowance (DA) is announced twice a year. When
the Pay Commission recommends pay revisions,
Other than the WPI, India also calculates inflation
at the consumer level, similar to all the economies the base is the CPI (IW).
of the world. As consumers in India show wide 2. CPI-UNME
differentiation of their choice of consumption,
purchasing powers. etc., a single consumer price The Consumer Price Index for the Urban Non-
index (CPI) has not been possible yet which can Manual Employees (CPI-UNME) has 1984–85
encompass all the Indian consumers.42 (first base year was 1958–59) as the base year and
Depending upon the socio-economic 146–365 commodities in the basket for which
differentiations among consumers, India has four data is collected at 59 centres in the country—
differing sets of CPI with some differentials in the data collection frequency is monthly with two
basket of commodities allotted to them. Though these weeks time lag.44
four types of CPIs is proposed to be withdrawn in This price index has limited use and it is
coming times, data for them are still released. A brief basically used for determining dearness allowances
account of the four CPIs are as under: (DAs) of employees of some foreign companies
1. CPI-IW operating in India (i.e., airlines, communications,
banking, insurance, embassies and other financial
The Consumer Price Index for the industrial services). It is also used under the Income Tax
workers (CPI-IW) has 260 items (plus the services) Act to determine capital gains and by the CSO
in its basket with 2001 as the base year43 (the first
(Central Statistical Organisation) for deflating
base year was 1958–59). The data is collected at
selected services sector’s contribution to the GDP
76 centres with one month’s frequency and the
at factor cost and current prices to calculate the
index has a time lag of one month.
corresponding figure at constant prices. Since the
Basically, this index specifies the government
publication of the CPI (U) started the index was
employees (other than banks’ and embassies’
discontinued with from January 2011.
personnel). The wages/salaries of the central
government employees are revised on the basis of 3. CPI-AL
the changes occurring in this index, the dearness
The Consumer Price Index for Agricultural
42. The economies of the Euro-American region have a Labourers (CPI-AL) has 1986–87 as its base year
single CPI as the majority of consumers show the same
consumer behaviour (see J.B. Rosser and M.V. Rosser, with 260 commodities in its basket. The data is
Comparative Economics in a Transforming World collected in 600 villages with a monthly frequency
Economy (Cambridge USA: Prentice Hall, MIT Press, and has three weeks time lag.
2004)).
43. Ministry of Finance, Economic Survey 2006–07, p. 90. 44. Ministry of Finance, Economic Survey 2001–02, p. 90.