The Base Year to Calculate CPI-AL is 1986-87

The Consumer Price Index for Agricultural Labourers (CPI-AL) is a measure of inflation that tracks changes in the prices of goods and services consumed by agricultural laborers. It is an important economic indicator used to monitor changes in the cost of living for this specific group.

The base year is the year against which the price changes are measured. It serves as a reference point for calculating the index. The base year is typically chosen based on the availability of reliable data and stability in the economy.

Significance of Base Year Selection

The selection of the base year is crucial as it affects the accuracy and relevance of the CPI-AL. The base year should ideally represent a period of stable prices and reflect the consumption patterns of agricultural laborers.

Reasons for Selecting 1986-87 as the Base Year

1. Availability of Data: The base year should have comprehensive and reliable data on the prices of goods and services consumed by agricultural laborers. The government collects data on prices from various sources, including market surveys and administrative records. The availability of data for 1986-87 was likely sufficient to calculate the CPI-AL.

2. Stability in the Economy: The base year should be a period of relative stability in the economy, with minimal fluctuations in prices. The year 1986-87 was chosen based on the assumption that it represents a period of stability in the agricultural sector.

3. Reflects Consumption Patterns: The base year should reflect the consumption patterns of agricultural laborers accurately. By selecting 1986-87, the government aimed to capture the typical basket of goods and services consumed by this group during that period.

4. Consistency with Other Indices: The base year selection for the CPI-AL might also be influenced by the base year selection for other related indices, such as the Consumer Price Index for Industrial Workers (CPI-IW) or the Consumer Price Index for Urban Non-Manual Employees (CPI-UNME). Consistency in base year selection helps in comparing and analyzing different indices.

Conclusion

In conclusion, the base year chosen to calculate the CPI-AL is 1986-87. This selection is based on factors such as data availability, stability in the economy, representation of consumption patterns, and consistency with other indices. The CPI-AL is an essential tool for monitoring inflation and changes in the cost of living for agricultural laborers.