Price rise in last six years is 152%.
Total increase in Consumer Price Index is 90 points.
Total DA due is 70 % as 1/6/12
The Confederation has prepared a comparative
chart of the price of 14 commodities, which go into the computation of minimum
wage. for more details see Confederation web site http://confederationhq.blogspot.in/ Placed there-under is the
computation of the Minimum wage on the basis of the prices of the requisite
articles as in January, 2012. It could
be seen there-from that while the prices on an average registered an increase
of 152% the DA compensation had only been 65%. This fact may kindly be used to
bring home the necessity of revision of wages immediately. .CLICK here for more information
The compilation of Consumer Price Index numbers generally consists of two stages i.e. (i) calculation of price indices for elementary aggregates (item level indices) and (ii) the aggregation of these elementary price indices to higher level indices using the weights associated with each level. Laspeyres formula is used for aggregation of indices. Specifications of items have been selected on the basis of popularity in the respective areas. These specifications are different in terms of units, quality etc for different price schedules. Prices relative of each product specification (current month price/base year average price) is worked out. Average of these price relatives under the respective item multiplied with 100 gives the index for that item.
The prices of the commonly used items of the common man has risen from 100% to 250% from last six years, where as the Consumer Price Index numbers has risen only by 90 points in last six years, We can observe that many of the common used items such as Rice, Wheat, tamrind, electricity bills ,water bills payments etc are missing in the Consumer Price Index Numbers weight-age , the miscellaneous weight-age is 25 % instead of that it should have been distributed in Fuel, Oils, vegetables. Housing etc, improper house rent rates are reflected in CPI the cost of a single dwelling in metros is Rs 8000, where as the Government rates of HRA is taken into account while commuting the CPI.
The compilation of Consumer Price Index numbers generally consists of two stages i.e. (i) calculation of price indices for elementary aggregates (item level indices) and (ii) the aggregation of these elementary price indices to higher level indices using the weights associated with each level. Laspeyres formula is used for aggregation of indices. Specifications of items have been selected on the basis of popularity in the respective areas. These specifications are different in terms of units, quality etc for different price schedules. Prices relative of each product specification (current month price/base year average price) is worked out. Average of these price relatives under the respective item multiplied with 100 gives the index for that item.
Laspeyres formula; go through the below links to know this formula works.
CLICK HERE for Laspeyres formula
CLICK HERE for Laspeyres formula
http://www.usna.edu/Users/econ/rbrady/312%20Materials/LaspeyresCalc.pdf
http://www.bea.gov/scb/pdf/2007/11%20november/1107_cpipce.pdf
Calculating a Laspeyres Index
A
Laspeyres Index is known as a “base-weighted” or “fixed-weighted” index
because the price increases are weighted by the quantities in the base
period. The Consumer Price Index is an example of a Laspeyres Index. In
this example, 2006 will serve as the base year. Formally, the
calculation is written,
Lt =
Pn
j=1 pjtqj0 Pn
j=1 pj0qj0
where the subscript “j0” refers to the base year value for good j, and t, refers to the current year.
Let us calculate DA using Laspeyres formula for example prices of Rice and Wheat are as follows
Price of Rice in 2006 is Rs 20 per kg for 100kgs consumption
Price of Rice in 2011 is Rs 30 per kg for 100kgs consumption
Price of Rice in 2012 is Rs 40 per kg for 100kgs consumption
Price of wheat in 2006 is Rs 15 per kg for 100kgs consumption
Price of wheat in 2011 is Rs 25 per kg for 100kgsconsumption
Price of wheat in 2012 is Rs 30 per kg for 100kgs consumption
Calculate Consumer Price Index using the Laspeyres formula
for 2012 year L2012 =
{100 × 40.00} + {100 × 30.00} / {100 × 20.00} + {100 × 15.00} = 4000+3000/2000+1500 =7000/3500 =200 points
for 2011 year L2011 =
{100 × 30.00} + {100 × 25.00} / {100 × 20.00} + {100 × 15.00} = 3000+2500/2000+1500 =5500 /3500 =157 points
Calculate DA
Dearness Allowance = (Avg of AICPI for the past 12 months - 115.76)*100/115.76
DA ={{ (200+157)/2} -115.76)}}*100/115.76 = (178-116) *100/115.76=6200/115.76= 53% DA
Price Rise is 100 % in last six years ,where as DA is 53 %.
Formula available for calculate CPI are
Laspeyres formula
Paasche formula
Fisher formula
Please click the link for Consumer Price Index Numbers - Separately for Rural and Urban Areas and also Combined (Rural plus Urban)
vide http://mospi.nic.in/Mospi_New/upload/brochure_n_cpi18_feb11.pdf
The Staff Side of JCM has represented to the 5th and 6th CPC about the faulty DA formula and the DA should be paid every three months and Average of AICPI should be removed. The same demand of the Staff Side of JCM should be there now also.
The Staff Side of JCM has represented to the 5th and 6th CPC about the faulty DA formula and the DA should be paid every three months and Average of AICPI should be removed. The same demand of the Staff Side of JCM should be there now also.
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