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Home / Business News / Industrial workers set for a salary hike

Industrial workers set for a salary hike

The base year for CPI-IW will be revised from 2001 to 2016 to reflect changing consumption patterns, which is likely to benefit millions of industrial workers, government employees and pensioners. The CPI-IW is used for calculating both industrial workers’ salaries as well as government staff’s DA and pensioners’ dearness relief (DR).

business Updated: Oct 16, 2020, 07:42 IST
Prashant K Nanda
Prashant K Nanda
The revised indices, which will be made public next week, will take into account data from a larger number of industrial centres—from 78 now to nearly 90—to capture the ground realities more accurately.
The revised indices, which will be made public next week, will take into account data from a larger number of industrial centres—from 78 now to nearly 90—to capture the ground realities more accurately. (Bloomberg file photo. Representative image)

Industrial workers’ salaries and government employees’ dearness allowances (DA) are likely to increase with the Union government set to revise the Consumer Price Index- Industrial Workers (CPI-IW).

The base year for CPI-IW will be revised from 2001 to 2016 to reflect changing consumption patterns, which is likely to benefit millions of industrial workers, government employees and pensioners. The CPI-IW is used for calculating both industrial workers’ salaries as well as government staff’s DA and pensioners’ dearness relief (DR).

The change in base year will reflect the changed consumption pattern of recent times and the new calculation is expected to give more weightage to increasing spending on education, healthcare, mobility, mobile phone expenses, and urban housing, etc., a government official said, requesting anonymity.

“We are revising it in the next few days and it will benefit a cross section of workers and pensioners,” said Apurva Chandra, the Union labour secretary.

“Expenditure on food consumption as a proportion of income by industrial workers has gone down by almost a quarter—from above 45% in 2001 to 36% in the new base year. Besides, there is proportional growth in spending on non-food items including education, healthcare and mobility, including the consumption on transport fuels like diesel and petrol,” the official added.

Also Read: WPI hits 7-month high of 1.3% in September

The revised indices, which will be made public next week, will take into account data from a larger number of industrial centres—from 78 now to nearly 90—to capture the ground realities more accurately.

“Though the revised base year will be 2016, it is still closer to the current scenario,” said the official, adding that even the broader Consumer Price Index (CPI) published by the national statistics office takes 2012 as its base year.

The official said while the CPI published by the ministry of statistics has pegged retail inflation at 6.69% in August and food inflation at over 9% in the same month, CPI-IW is much lower. As per the latest data, year-on-year inflation (CPI-IW) stood at 5.63% for August compared with 5.33% for July and 6.31% recorded in August 2019.

“This is primarily because of the old base-year of 2001 for CPI-IW. A revised base and a more realistic consumption calculation will enhance this number, correspondingly improving DA, DR of government staff and wages of industrial workers,” the official said.

To be sure, salaries of industrial workers may go up sooner when it is revised in the next few months, while DA and DR will only go up after government lifts a moratorium imposed due to the pandemic. In April, the Union government froze DA and DR for three instalments till June 30, 2021 to save ₹37,530 crore. So, when the DA and DR are offered from July, the new calculations will kick in for government staffers and may give them a better inflation-linked pay hike.

“The increase in CPI-IW will have a positive effect on wages/salaries of industrial workers engaged in organised sector besides government employees and pensioners,” labour minister Santosh Gangwar said on September 30 while releasing the CPI-IW for August.

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