Can the CPI number for urban non-manual emplyees represent the changes in the cost of living of the President of India?

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Solution

The CPI for the urban non-manual employees cannot represent the changes in the cost of living of the President of India. This is because the consumption basket of an average non-manual employee does not consist of the items that would be a part of the consumption basket of the President of India.

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The CPI number for urban non-manual employees can represent the changes in the cost of living of the President of India.

The CPI for industrial workers and agricultural labourers are published by Central Statistical Organisation. The Labour Bureau publishes the CPI number of urban non manual employees. This is necessary because their typical consumption baskets contain many dissimilar items.

The CPI is slightly different from the cost of living index in that the latter includes aspects such as environment, education, health apart from CPI and that’ why CPI is sometimes called “conditional” cost of living index.

Q. A union meant to protect the interests and rights of the non-manual employees is called a ________.

Given the following data:

Year	CPI of Industrial Workers (1982 = 100)	CPI of Urban Non-manual Employees (1984-85 = 100)	CPI of Agricultural Labourers (1986-87 = 100)	WPI (1993-94 = 100)
1995–96	313	257	234	121.6
1996–97	342	283	256	127.2
1997–98	366	302	264	132.8
1998–99	414	337	293	140.7
1999–00	428	352	306	145.3
2000–01	444	352	306	155.7
2001–02	463	390	309	161.3
2002–03	482	405	319	166.8
2003–04	500	420	331	175.9

Source: Economic Survey, Government of India 2004-2005

(i) Calculate the inflation rates using different index numbers.

(ii) Comment on the relative values of the index numbers.

(iii) Are they comparable?

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