Comrade,
Now it is time for 2021 index in consultation with stake holders including Central Government Employees Association, Trade unions, Bank Employees union etc. . The higher inflation above 4 % has adversely affected the common man and the Central Government Employees even though DA is released for Government employees and Pensioners but it is not fully compensated due to higher inflation levels and the DA is released after six months of price rise , these six months we are not compensated for the price rise. For example if the consumer price index rises in Jan 2021 , we get paid in October 2021 as the increase in consumer price index from Jan to June is approved by union Cabinet in September, even there is an decimal is left over example if DA is increased by 2.95% , then we get only 2% DA against the price rise of 2.95% as these 0.95 will be carried over to next time . But whereas in Banks even the decimal is taken into account. So an average loss for the Central Government Employees and Pensioners is about Rs 5000 in a year due to rounding of DA to lower levels rather than higher levels.
The Covid situation has
resulted in higher inflation in the year 2020 especially during the period due to various factors like shut down of
industrial units due to lockdown , which has resulted in the gap between demand
and supply which is the one of the causes of higher inflation, the second
aspect is that food production has also gone down excess rains, lockdown, the
gap between demand and supply etc.
In the year 2021 the higher
inflation is due to rise in prices of petroleum products and higher taxation by
both Central Government and State Governments
on Petrol and Diesel. This has resulted in higher inflation. This
paper has been prepared to study the impact of new consumer price index on
Government employees and the need for new consumer price index 2021.
The inflation rate along with the
inflation in the food basket is at as per data released by the Ministry of
Statistics & Programme Implementation (MoSPI) website .
http://mospi.nic.in/
The details are taken from the labour bureau website: http://labourbureau.gov.in the comparison has been made for let
us study five years data available with us.
|
Month
|
Retail Inflation % |
Consumer Food Price Index
(CFPI) in % |
|
June
2016 |
4.20 |
The inflation in the food basket is at 3.32 |
|
June
2017 |
2.18 |
The inflation in the food basket is at -1.05 |
|
June
2018 |
5.00 |
The inflation in the food basket is at 2.91 |
|
June
2019 |
6.09 |
The inflation in the food basket is at 7.87 |
|
October
2019 |
4.62 |
The inflation in the food basket is at 7.89 |
|
December
2019 |
7.35 |
The inflation in the food basket is at 14.12 |
|
July
2020 |
6.93 |
The inflation in the food basket is at 9.82 |
|
November
2020 |
6.93 |
The inflation in the food basket is at 9.5 |
|
December
2020 |
4.59
|
Food inflation declined to 3.41 |
|
January 2021 |
4.06 |
Food inflation declined to 1.89 |
|
Feb
2021 |
5.03 |
Food inflation declined to 3.87 |
|
March
2021 |
5.52
|
Food inflation declined to 4.87 |
|
April
2021 |
4.29
|
Food inflation declined to 2.02 |
|
May
2021 |
6.30 |
Food inflation is at 5.01 |
|
June
2021 |
6.26 |
Food inflation is at 5.15 |
|
July
2021 |
5.59 |
Food inflation is at 3.96 |
|
August
2021 |
5.30
|
Food inflation is at 3.11 |
Let us study the
All India year-on-year inflation rates (%) for August 2021 (Base: 2012=100)
http://mospi.nic.in/sites/default/files/press_release/CPI_PR_13sep21.pdf
|
Description |
Aug.
20 Index |
Aug.
21 Index |
Inflation
Rate (%) |
|
Food
and beverages |
158.0 |
164.0 |
3.80 |
|
Pan,
tobacco and intoxicants |
184.4 |
191.7 |
3.96 |
|
Clothing
and footwear |
152.0 |
162.4 |
6.84 |
|
Housing |
156.3 |
162.4 |
3.90 |
|
Fuel
and light |
142.9 |
161.4 |
12.95 |
|
Miscellaneous |
150.0 |
159.6 |
6.40 |
|
Items
in Miscellaneous |
|
|
|
|
Household
goods and services |
148.7 |
156.8 |
5.45 |
|
Health |
155.6 |
167.7 |
7.78 |
|
Transport
and communication |
139.6 |
153.9 |
10.24 |
|
Recreation
and amusement |
146.6 |
156.1 |
6.48 |
|
Education |
157.5 |
163.5 |
3.81 |
|
Personal
care and effects |
158.4 |
160.0 |
1.01 |
Comparison
of one year increase August 2019 – August 2020
|
Groups |
Aug, 2019 |
Aug, 2020 |
Increase in
points |
Weightage 2001 |
Increase in %
as per 2001 index |
Weightage 2016 |
Increase in %
as per 2016 index |
|
Food Group |
330 |
352 |
22 |
46.2 |
10.16 |
39.2 |
8.62 |
|
Education, health Pan, Supari, Tobacco &
Intoxicants |
391 |
408 |
17 |
23.3 |
3.96 |
30.3 |
5.15 |
|
Fuel &
Light |
282 |
299 |
17 |
6.6 |
1.12 |
6.1 |
1.03 |
|
Housing |
434 |
465 |
31 |
15.3 |
4.74 |
16.9 |
5.24 |
|
Clothing.
Bedding & Footwear |
226 |
230 |
04 |
6.4 |
0.256 |
5.5 |
0.22 |
|
Miscellaneous
Group |
254 |
260 |
06 |
2.3 |
0.138 |
2.1 |
0.125 |
|
General Index |
320 |
338 |
|
100 |
20.374 |
100 |
20.385 |
The price rise in 2019-20 year is not only increasing in food with 22 points , but also in housing which has shown price rise of 31 points, both Miscellaneous and fuel increased by 17 points . So we cannot say that food basket alone will contribute to higher Consumer Price Index
The reduction in food basket is taking place in 1982 it was
57%, it was reduced to 46.2% in 2001 and now in 2016 it is 39.17%, The increase
in miscellaneous basket is taking place in 1982 it was 16.36 %, it was increased
to 23.26 % in 2001 and now in 2016 it is 30.3 % The housing allocation has
increased from 15.3 to 16.9 this is good move in a long run may be 2020 -21 we
are not seeing enough increase. The
decrease in Fuel
and light from 6.43 % to 5.5 % has affected us.
We can notice in
the year 2020 the inflation rate is much higher than the year 2019 , especially
the inflation in the food basket. However we can notice in that in last five years the inflation in the
food basket is less than the inflation rate & also we can notice that
in Dec 2020 to August 2021 the food inflation has decreased compared to 2019-20
levels, so we should not allocate more percentage on food basket , as the vegetable prices
varies from one place to another and on a monthly basis / seasonal basis it
changes so it is difficult to predict the impact of food prices on DA for
example the prices of the onion/ tomato/ potato will be varying from Rs 10 per
kg to Rs 100 per kg in a year. The prices of food articles such as rice, wheat
, pulses are steady increase. The other food articles such as oil etc
rise and fall depending upon the production. Expenditure
on food consumption by industrial workers has fallen significantly in 15 years
from 45% to 36% with corresponding increase on non-food items,
The Union government has changed the base year
for the consumer price index for industrial workers (CPI-IW), which will affect
the minimum wage of private sector workers and Dearness allowance (DA) of government employees without consulting the trade
unions. The CPI-IW (2016=100) series
replaces the CPI-IW (2001=100) series. As per the recommendations of the International Labour
Organization (ILO), Index Review Committee (IRC) and National Statistical
Commission (NSC), the base year of price index numbers should be revised at
frequent intervals, generally not exceeding 10 years to reflect the changes
that take place in the consumption pattern of consumers. Earlier to this
revision, the series were also revised from the year 1944 to 1949; 1949 to
1960; 1960 to 1982 and 1982 to 2001 since inception of Labour Bureau.
All
India index for the month of September, 2020 stands at the level of 118 and
linking factor for the conversion of new series index to previous series on
base 2001=100 is 2.88. (AICPIN for month September 2001-100 based is 340) The CPI-IW (2016=100)
series replaces the CPI-IW (2001=100) series.
The life style of the people has changed
considerably in past two decades, the purchasing priority has changed from food
and other items as television, mobile, transport, entrainment, health etc. But the trade unions were never consulted by
the Government at any stage in either the in 2001 and 2016 index formation.
The number of centres are also increased from
78 to 88 centres. The number of States/UTs has increased to 28 under 2016 series as against
25 in the 2001 series. The sample size was increased from 41,040 families to
48,384, and the number of selected markets for collecting retail price data
from 289 to 317. The number of items directly retained in the index basket
has increased to 463 items as against 392 items in the 2001 series. This may
dilute the effect of raise in prices in in a
particular item.
So we should increase the allocation on
Household goods and services, Fuel and light Clothing and
footwear, Health, Transport
and communication rather than only concentrating on food.
The Covid has
affected the entire world which had resulted in economic fallout , India has
also been affected which has resulted in economic impact on the working class ,
poor people , Government employees were also affected by it , which has
impacted the life of the working class , poor people , as many industrial units were shut down ,
business was its lowest this has pushed up the inflation levels.
The higher inflation above 4 % has adversely affected the common man and the Central Government Employees even though DA/DR is released for Government employees and Pensioners but it is not fully compensated due to higher inflation levels and the DA / DR is released after six months of price rise , these six months we are not compensated for the price rise .
The
prices are calculated as per Government rates, not on prevailing market rates,
net difference of price rise about 30 % which is always we are denied right
from 1960 to till date .
The
overall the Government employees and pensioners are affected due to price rise
and higher inflation as they are not fully compensated against this. The CPI-IW (2016=100) series replaces the
CPI-IW (2001=100) series. This revision has taken place after 15 years. The consumer
price index weightage should be re indexed every 5 years (five years ) so that the
employees and pensioners will get proper DA / DR the last index has taken place
in the year 2016 . Proper linking factor should also be provided. Now it is time for 2021 index in consultation
with stake holders including Central Government Employees Association, Trade
unions, Bank Employees union etc.
.
Comradely yours
(P.S.Prasad)
Working
President
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