New Delhi: A panel reviewing India’s consumer price index for industrial workers has suggested that income and expenditure surveys, widely used in the country to arrive at salaries or wages, be conducted every 10 years according to the recommendations of the International Labour Organization.
The recommendation follows persistent demands by trade unions, which claim workers’ wages have barely kept up with the rising prices of essential commodities.
The so-called Index Review Committee also favours the creation of a tripartite panel with representatives from trade unions, employers’ organizations and academicians to provide inputs on ways to conduct these expenditure surveys and to gather weekly retail price data from shops.
The panel has also recommended that women’s organizations and non-governmental organizations (NGOs) be consulted while selecting these shops.
Family income and expenditure surveys of India’s working class, that involve gathering information from at least 50,000 households by some 2,000 price investigators, were last carried out by the country’s labour bureau in 2001 after a gap of two decades. The survey was previously conducted in 1982, and before that, in 1960.
Experts have long held that the gap between two surveys is too wide to capture changes in consumption habits and expenditure, posing a problem in correctly adjusting the salaries of these workers, who are mostly urban poor.
“Ideally, the frequency should be more. The National Sample Survey, for example, conducts surveys on consumer expenditure every five years. If there are significant changes in the consumption basket, it can be taken as a guide to whether we need frequent surveys (for consumer price index),” said Shashank Bhide, senior fellow at National Council of Applied Economic Research, a Delhi-based think tank.
The expenditure survey creates a baseline to measure retail inflation, or the Consumer Price Index, which then forms the basis on which the so-called dearness allowance of workers is calculated.
This allowance is expected to serve as a cost of living adjustor that helps workers cope with inflation.
Such allowances are part of the salaries of government emplyees and even some private sector employees and workers.
The new survey too will have its own limitations, said Arup Mitra, a professor at the Institute of Economic Growth and member of the review committee.
“There is a possibility that (the) surveys do not reflect changes in prices in the open market. To presume that consumption patterns remain unchanged for 10 years is also an unrealistic assumption when consumerism is growing,” Mitra said.