The government has discontinued a decades-old monthly index that measures the inflation level faced by white collar workers, in order to usher in a comprehensive consumer price index for urban India.
The consumer price index for urban non-manual workers (CPI-UNME) was last released on April 25, when it gave the data for the month of March. The index had risen 6.02 per cent over the same month last year.
"This is a good move. The index was not serving any purpose. Ultimately, we have to get rid of the various consumer price indices catering to different sections of the society and come out with a comprehensive national consumer price index," said Dharmakirti Joshi, principal economist, Crisil.
Because of outdated base year and deployment of field investigators for collection of price data for a broad-based CPI- Urban number, the Central Statistical Organisation (CSO) discontinued the index after the National Statistical Commission (NSC), the apex statistical body, made a recommendation to this effect at its meeting on February 15.
The Commission recommended adopting a "link index" based on the CPI-IW data released every month by the Labour Bureau.
"This parallel series will be discontinued after the proposed CPI-Urban index is ready by next year," said an official with the Ministry of Statistics and Programme Implementation. The link index is being made available with a two-month time lag, officials added.
Economists point out that the CPI-UNME, with a base year of 1984-85, had limited use. The index was aimed at determining dearness allowances of employees of some foreign companies working in service sectors, such as airlines, communications, banking, insurance and other financial services, in India.
However, analysts say the CPI-UNME was hardly used for that purpose. The index was used under the Income Tax Act to determine capital gains, while the CSO used it for deflating selected service sectors' gross domestic product (GDP) at current prices to arrive at the corresponding GDP at constant factor cost.