Measuring Inflation

Nearly four decades since its last iteration, the Centre is planning to revise the base year of the consumer price index for CPI-AL/RL to better capture price increases.

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says although the minimum wages are applicable only in scheduled employment and the compliance regime is pretty weak to enforce them on the ground, they do set a floor wage rate for employers to follow. "At best, they are only implemented in the government's own establishments. Indian labour market with its highly stratified nature means that they serve as an indicator for the wage market and for the workers to demand a certain wage from their contractors," he adds.

Revising the base year

The exercise is part of a broader effort by the government to introduce new series for several key macroeconomic indicators, including the Index of Industrial Production (IIP), gross domestic product (GDP), and the consumer price index (CPI).

Currently, the base years for CPI and CPI-IW (industrial workers) are 2012 and 2016, respectively, while the base year for CPI-AL/RL is 1986-87. The base year for CPI-AL/RL was last revised nearly three decades ago, in November 1995.

For this purpose, the Labour Bureau has constituted an expert committee, chaired by National Statistical Commission (NSC) member Asit Kumar Sadhu, to shift the base year from 1986-87 to the 2024-25 agricultural year.

"The 1986-87 base year is too outdated now... The country has moved forward, and consumption patterns have changed. Unless the indices are revised, they won't reflect actual consumption patterns. Most importantly, they won't capture rural and agriculture wages," a senior government official explains.