Updated B.G Prasad's classification for the year 2021: consideration for new base year 2016.

Sir:

On October 22, 2020, the Ministry of Labor and Employment, India released the new series of Consumer Price Index for Industrial Workers (CPI-IW) with the base year 2016. The new CPI-IW with base 2016 (=100) will replace the existing series with base 2001 (=100). Such revisions were also made from the years 1944 to 1949, 1949 to 1960, 1960 to1982, and 1982 to 2001. CPI-IW is compiled as per international best practices, and the base year of price index numbers should be revised at frequent intervals, generally not exceeding 10 years, to reflect the changes that take place in the consumption pattern of consumers.[1]

The socio-economic status (SES) of an individual or a family is one of the primary factors influencing the health[2], and CPI-IW is required to compute the SES of a family. Modified BG Prasad scale is one of the most widely used scale to measure the SES of families, both in urban and rural areas. BG Prasad’s classification was introduced in 1961 considering the base of the consumer price index (CPI) for 1960 as 100[3] and modified in 1982 and 2001 by introducing linking factors to convert CPI (1982 and 2001) from the new base of 100 to the old base CPI (1960). The linking factors for 1982 and 2001 were 4.93 and 4.63, respectively.[1]

After the release of the new series of CPI-IW with base 2016 (=100) on October 22, 2020, Prasad’s classification should be computed by considering this new base and giving due weightage for the linking factor between 2001 and 2016. The linking factor for the conversion of the new series index of base 2016 (=100) to the previous series on base 2001 (=100) is 2.88.[1] The linking factors from the year 1960 to 2016 are summarized in Table 1.

Table 1

Linking factors from the year 1960 to 2016

Price index by old base 1960 for the original scale=100

Price index by new base 1982 for the year 1982=100

Linking factor between 1960 and 1982 series=4.93

Price index by new base 2001 for the year 2001=100

Linking factor between 1982 and 2001 series=4.63

Price index by new base 2016 for the year 2016=100

Linking factor between 2001 and 2016 series=2.88

Updated and modified value for BG Prasad socioeconomic classification for May 2021 can be calculated as follows:

Calculating multiplying factor for May 2021 from the latest available CPI-IW for March 2021[4] (i.e. 119.6, available from Ministry of Labor and Employment): Multiplying factor = current index value for March 2021 (=119.6)/Base index value in 2016 (=100) =1.196.

The formula for calculating new income value for May 2021: New value = Multiplying factor (1.196) × [Old value × Linking factor between 1960 and 1982 series (4.93) × Linking factor between 1982 and 2001 series (4.63) × Linking factor between 2001 and 2016 series (2.88)].

The updated and modified value for BG Prasad socioeconomic classification calculated as per the new income value for May 2021 is given in Table 2.

Table 2

Modified BG Prasad Classification for May 2021

Social class	Per capita income (₹) as per original classification in 1961	Per capita income (₹) as per modified classification for May 2021
I	≥100	≥7863
II	50-99	3931-7862
III	30-49	2359-3930
IV	15-29	1179-2358
V	<15	<1179

Financial support and sponsorship

Nil.

Conflicts of interest

There are no conflicts of interest.