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Question
Can the CPI for urban non-manual employees represent the changes in the cost of living of the President of India?
Short Note
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 the non-manual employees consists of different items than those of the consumption basket of the President of India. In fact, in India CPI for industrial workers is the most popular index. This is used by the government to regulate Dearness Allowance (D.A.) to compensate its employees against the price rise. Hence, the CPI for the industrial workers cannot represent the changes in the cost of living of the President of India.
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Meaning of Index Numbers
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