Trade Unions To Oppose Introduction

Of Fraudulent Price Index 

M K Pandhe

A SPECIAL meeting of the Technical Advisory Committee on Statistics of Prices and Cost of Living was held in the headquarters of the Central Statistical Organisation to consider release of Consumer Price Index (Industrial Workers) with base year 2001. The representatives of central trade unions and employers’ organisations were invited to attend the meeting as special invitees. From the central trade unions, representatives of CITU, INTUC and BMS attended the meeting.

At the outset, the representatives of the government spoke on the methodology adopted while conducting the family budget surveys and compiling of consumer price index numbers with 2001 as base year. They also explained the discussions held with the workers and employers organisations on May 19-20, 2005 and September 9, 2005 and observed that the present meeting should finalise the decision to release price index series as it is already too late.

The representatives of the trade unions pointed out that the central trade unions had demanded meeting prior to commencement of the work of family budget survey followed by price collection and compilation. The Labour Bureau refused to hold such a meeting and went ahead with local level exercise bypassing the central trade unions. The complaints made by the central trade unions to the labour ministry were not replied, which clearly exposed the intention of the government to avoid the trade unions and finalise the work of compilation of price index without consulting them. And precisely that has been done while compiling the new series with 2001 as base year and now the government is trying to get the stamp of approval on their unilateral exercise from the trade unions.

DELIBERATELY AVOIDING

TRADE UNIONS

Avoiding the involvement of trade unions in dealing with the details of index compilation exercise on the part of the government is deliberate. The intention is to keep the price index numbers artificially depressed to project a low-inflation situation and also to help the employers to minimise the DA payment outgo. The price index compilation exercise comprise of deciding the commodity baskets, assigning appropriate weightage on each commodity in the basket based on its real share in total consumption expenditure of the concerned workers, selection of appropriate shops throughout the country through proper and scientific sampling and collection of prices therefrom, processing and compilation of data to arrive at index numbers etc. On all these aspects, the trade unions made many concrete and practical suggestions on various occasions to ensure that the price-index numbers reflect real price-situation in the country. But on none of the aspects as detailed above, trade unions’ valid suggestions have been paid heed to, rather despite repeated persuasion, the concerned authority meticulously avoided their association and involvement in the price index exercise. 

NONIMPLEMENTATION OF

THE DECISION OF THE

INDEX REVIEW COMMITTEE

M K Pandhe, president CITU, who was also a member of the Index Review Committee (Rath Committee) appointed by the government of India in 1978, pointed out how the government of India (GoI) failed to implement even the unanimous recommendations of the said committee. The Rath committee proposed involvement of trade unions at every stage of the exercise on compilation price index numbers and also constitution of tripartite standing committees both at the central and state level to monitor the price index-exercise. The committee also recommended some corrective measures to make the price index more reliable. However, the GoI did not implement them in their true spirit. Repeated demand by the trade unions to convene a meeting to review the implementation of the recommendation of the Index Review Committee went unheeded by the labour ministry.

The CITU representative pointed out how the former Director of the Labour Bureau was found to be in league with the Indian Jute Mills Association and had to be dismissed from service. It was also pointed out with specific examples that the price collection mechanism have all along been extremely faulty and real prices have never been collected for compilation of price index. In a previous investigation it was found that data was being collected from non-existent shops while shopkeepers frequently quoted figures much below the actual rates in the market.

FRAUDULENT METHODOLOGY        

The representatives of the trade unions pointed out how wholesale prices are collected to feed the data when retail prices are much higher. Prices of inferior substitutes are being taken into account on the plea that original commodities are not available in the market. They pointed out the recent example of Mumbai where price index fell by 30 points in a month when workers are experiencing rise in prices of commodities in the market. Prices are often repeated at par with previous month or changed marginally despite upward movement in the market. The deterioration in quality of commodity is not taken into account. All these are responsible for distorted reflection and depressed price index numbers at wide variance with reality.

The trade unions have placed concrete examples as to how the employers save hundreds of crores of rupees if price index is depressed even by one point at the cost of workers. The examples of their influencing the price collection machinery have been exposed in the past and this aspect cannot be ignored when the need for restoring confidence of the workers assumes paramount importance.

It was noted that in the past whenever the workers criticised fraudulent index, the official statisticians always argued about the scientific methods adopted by the Labour Bureau. However, every expert committee appointed by the government pointed out mistakes of the price-index compilation machinery and noted gross underestimation of the price situation in the prevailing index numbers.

Trade Unions debunked the government’s claim that they regularly consulted the trade unions on the issue of compilation of price index. They noted that during last 15 years, prior to May 2005, not a single meeting was convened by the government to deal on the issue despite repeated demands by the central trade unions.

The representative of Bharatiya Mazdoor Sangh, S S Pranjape, while reiterating that the price index does not reflect the actual rise in prices of the essential commodities recorded his observation through a written note which says, inter alia, “If CPI with 2001=100, is released without considering above factors, working class will be deprived of justified dearness allowance.”

The INTUC representative Lalan Singh criticised the opposition of the government to appoint a Review Committee which clearly exposed the government’s intention to allow introduction of the defective series. Without full confidence of the working class in the price collection machinery, it would not be possible for the trade unions to accept the new series as proposed by the government spokesman.

EMPLOYERS’ EAGERNESS

All the three representatives of the employers organisations, as usual, zealously expressed full confidence on the price collection machinery and demanded early introduction of the 2001=100 series since the old series has become outmoded.  This is quite natural as the defect of price index numbers lies in underestimation of the price movement thereby depressing the price index, much to the advantage of the employers to save hundred of crores of rupees on DA payment only. 

The chairman of the meeting could not but admit the defects in the series and the compilation machinery pointed out by the trade unions and suggested that they can be corrected by improving the price collection machinery. He noted that the GoI agreed to include one representative each from trade unions and employers’ organisations on the Technical Advisory Committee which should take care of the apprehensions of the trade unions.

The chairman further noted that the trade unions should have been consulted at every stage of compilation work of the price index. But at the same time he said that it is now too late to have the Review Committee as suggested by the trade unions and requested the trade unions to agree to release of the new index series and make necessary correction after introduction of the new series.

All other members of the Technical Advisory Committee readily agreed to release of the new series. The representatives of the trade unions stuck to their points of criticism and firmly maintained that without appointment of the Review Committee and implementation of its recommendation, they would not agree for the introduction of the new series. Delay cannot be the only matter of concern, rather hurrying for releasing a defective series of price index which suffers from gross underestimation of the price situation leading to deprivation of crores of workers from their legitimate compensation is a big concern. This fraudulent price index bestows big bonanza to the employers and would be a gross impropriety and a fraud on the working people, the trade union representatives asserted.

After the meeting, the trade union representatives of CITU, BMS and INTUC met and decided to jointly write to the secretary, Ministry of Labour demanding constitution of Index Review Committee to propose rectification of 1982 as well as 2001 series. They further demanded appointment of Standing Committee, both at state and central level, to monitor the entire work of price index compilation work. Accordingly, all the central trade unions , viz., INTUC, BMS, CITU, HMS, AITUC, UTUC, UTUC-LS, TUCC and AICCTU conveyed to the labour secretary, GoI in writing their full support to the stand taken by the three trade union representatives in the meeting of Technical Advisory Committee. The trade unions made it clear that if the government of India unilaterally went ahead with the introduction of the new series with 2001 as base year, there will be stout opposition to such move imposing fraudulent series on the working class.