The plutocratic bias in the Indian consumer price index

Dilip M. Nachane and Aditi Chaubal

International Labour Review, 2019, vol. 158, issue 2, 365-391

Abstract: Studies have found a plutocratic bias in the traditional Laspeyres‐type consumer price index (CPI), attaching greater importance to expenditure by rich households compared to the poor, while the democratic CPI attaches equal weight to all. The authors calculate the democratic index and estimate the plutocratic bias for the new Indian CPI (launched in 2012), the rural and urban CPIs, and the CPIs of three Indian states from 2012 to 2015. They further develop democratic indices for commodity groups and separate indices for three expenditure brackets. The biases found against less developed states and the poorer sections of the population have important implications for monetary policy and indexation of transfer payments.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:bla:intlab:v:158:y:2019:i:2:p:365-391

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