Indian Journal of Public Health

COMMENTARY
Year
: 2021  |  Volume : 65  |  Issue : 4  |  Page : 418--421

Revised kuppuswamy scale for 2021 based on new consumer price index and use of conversion factors


Syed Najmul Ain1, Zahid Ali Khan2, Mohamad Azhar Gilani3,  
1 Senior Resident, Department of Community Medicine, GMC Baramulla, Baramulla, India
2 Assistant Professor, Department of Community Medicine, GMC Baramulla, Baramulla, India
3 Post-Graduate Student of Orthopaedics, Department of Orthopaedics, SKIMS Medical College and Hospital, Srinagar, Jammu and Kashmir, India

Correspondence Address:
Syed Najmul Ain
Noorbagh, Baramulla - 193 101, Jammu and Kashmir
India

Abstract

One of the factors that affect the health of the people is the socioeconomic class. One of the widely used scales for measuring socioeconomic status is the Kuppuswamy scale originally developed in 1976. It must be updated with time as it takes family income into account. The revision of income can be done by using Consumer price index for industrial workers. Conversion factors were given by earlier researchers whenever the base year changed to update the scale. Since the base year has now been changed to 2016, we are giving conversion factor to be multiplied with income categories of 2001 to get the updated scale. We have shown how to calculate the conversion factors and when they are required. We have deducted a conversion factor of 3.26 which is to be multiplied with income categories of 2001 to get the updated scale for February 2021.



How to cite this article:
Ain SN, Khan ZA, Gilani MA. Revised kuppuswamy scale for 2021 based on new consumer price index and use of conversion factors.Indian J Public Health 2021;65:418-421


How to cite this URL:
Ain SN, Khan ZA, Gilani MA. Revised kuppuswamy scale for 2021 based on new consumer price index and use of conversion factors. Indian J Public Health [serial online] 2021 [cited 2022 May 24 ];65:418-421
Available from: https://www.ijph.in/text.asp?2021/65/4/418/333968


Full Text



 Introduction



One of the most widely used scales for measuring socioeconomic status is the Kuppuswamy scale originally developed in 1976.[1] It takes into account education of head of family, occupation of head of family and family income per month. The first two mostly remain unchanged while the family income must be updated with time because of inflation and thus reduction in purchasing power for the same income. The revision of income categories can be done using consumer price index for industrial workers (CPI-IW) on the basis of which income or salaries of employees are revised. CPI-IW is updated on the website of the labor bureau which can be accessed using the link http://labourbureau.gov.in/LBO_Press_Release.htm

CPI is given by the formula,

[INLINE:1]

For updating Kuppuswamy scale value of income categories given by Kuppuswamy in 1976 is to be calculated for today, for example, if a particular quantity of goods could be bought of Rs. 2000 in 1976, what amount of money would buy the same quantity of goods today.

Writing “Monthly Family Income” instead of “Price” in the above formula

[INLINE:2]

Therefore, if we know the CPI of current year with respect to (w. r. t.) a base year and monthly income in the same base year, the monthly income in the current year can be calculated. In such case, the formula can be used directly. The base year is set by labor and employment ministry and changed from time to time and thus cannot be arbitrarily selected or by one's choice. Whenever base year changes, CPI of subsequent months and years will be calculated based on new base year. There may be situations when we know the monthly income in base year but the CPI may not be updated according to base year. In that case, we have to update the current CPI according to new base. Or sometimes we may know the current CPI according to new base but the monthly income categories in the base year are not known. In that case, the monthly income categories in the base year are calculated first and then the above formula can be used.

 Revisions in the Past



For making calculations simple, a multiplication factor is calculated which is multiplied to the income categories of a base year for getting new income categories. Alternatively, a linking factor is provided with the change of base year which is to be multiplied with the new CPIs to convert these into CPIs with old base.

Till now the base years have been 1960, 1982, 2001. Recently in October 2020, the base year was changed to 2016.[2]

D. Mishra et al. revised the Kuppuswamy scale for 1998 and gave the conversion factors for subsequent years till a new base year was set. They calculated the conversion factor of a year by dividing the current CPI-IW (of any year including 1998) by 60.04. The resulting conversion factor was to be multiplied with the income groups of 1976 for getting the income groups for the current year.

The calculations are as under: (For the sake of convenience we have denoted monthly family income by “P”)

[INLINE:3]

But P in 1982 (the base year) is not known.

We already know (from the website of labor bureau),

CPI 1976 (wrt 1960) = 297 and CPI 1982(wrt 1960) = 490

[INLINE:4]

Dividing (3) by (4),

[INLINE:5]

Multiplying both sides by 100,

[INLINE:6]

LHS is the CPI of 1976 w. r. t. new base 1982,

[INLINE:7]

This is what was obtained by Mishra D.

From equation (2),

[INLINE:8]

Substituting, (5) in the above equation,

[INLINE:9]

[INSIDE:1] is the conversion factor to be multiplied with the income categories of 1976 for updating the scale for 1998 as was done by Mishra D.[3]

Conversion factors for all years ahead can be calculated by dividing the CPI (w. r. t. 1982) of that year by 60.04 as was shown by Mishra D in their article. This could be done till a new base was set.

In 2006, the base year was changed to 2001.[4] Kumar et al. then updated the Kuppuswamy scale for 2007 by deriving the new conversion factors for the years ahead.

The calculations are:

[INLINE:10]

Dividing (6) by (7), we get

[INLINE:11]

Multiplying both sides by 100, LHS is the CPI 1998 (w. r. t. new base 2001)

[INLINE:12]

This new CPI 1998 was used by Kumar N as division factor.

[INLINE:13]

[INLINE:14]

[INSIDE:2] gives the multiplication factor for any year which is to be multiplied to income categories in 1998 for updating income categories till a new base is set. CPIs (w. r. t. 2001) of years 2001, 2016, 2017, 2018 and 2019 are 100, 274.33, 281.17, 294.83 and 317.41 respectively. Consequently, the multiplication [INSIDE:3] factors (are 1.13, 3.10, 3.18, 3.33 and 3.58, respectively. The updated income categories for these years based on these multiplication factors are given in [Table 1].{Table 1}

Now, the base year was changed to 2016 in October 2020.[5] Therefore, there is a need to calculate new conversion factor. New CPIs (w. r. t. 2016) have already been released on the website of labor bureau since October 2020.

Our calculations

[INLINE:15]

This formula can be used directly since the CPIs have been updated on the website of labor bureau since October 2020 and we have already calculated the updated income categories of 2016 in this paper.

However, w. r. t. 2001, we are giving conversion factor in this paper which may also be used by researchers as an alternative. So our further calculations are:

CPI 2016(w. r. t. 2001) =274.33

[INLINE:16]

Putting equation (11) in (10),

[INLINE:17]

[INSIDE:4] gives the multiplication factor till a new base is set.

The multiplication factor, [INSIDE:5], is to be multiplied with income categories of 2001 to get the updated scale. The CPIs (w. r. t. 2016) of the months September, October, November, December of 2020, January and February 2021 are 118.1, 119.5, 119.9, 118.8, 118.2 and 119.0 respectively. Consequently, the multiplication factors, [INSIDE:6], for these months are 3.24, 3.28, 3.29, 3.26, 3.24 and 3.26 respectively. The updated income categories for the Kuppuswamy scale for September 2020, January and February 2021 are given in [Table 2].{Table 2}

Limitations

While updating the scale we did not use the linking factor of 2.88 between CPI 2016 and 2001. We updated the scale mathematically as done by Mishra D and Kumar N. If a researcher uses the linking factor of 2.88 to convert the new CPIs into old CPIs (w. r. t. 2001) and then calculates new income categories, there may be minute variations from the income categories that we have given but the variations will not be too high to misclassify families. Such small variations can be tolerated.

 Conclusion



Our research article lucidly explains, for anyone knowing basic arithmetic, how current income categories can be calculated. Same can be followed for updating other income-based scales like BG Prasad's scale. Conversion factors are not always required. If we have CPI of a year and the income categories in same base year with respect to which the CPI is known, the formula for CPI can be used directly. When a new base year is set, researchers can simply calculate prices in the new base year and use new CPIs. If the prices in new base year are not available, conversion factors need to be calculated. It is important to remember that when a conversion factor is used, the year of which the income categories are taken for multiplication must be correctly taken (e.g., 88.43 is to be multiplied with income categories of 1998, 36.45 with income categories of 2001).

Financial support and sponsorship

Nil.

Conflicts of interest

There are no conflicts of interest.

References

1Kuppuswamy B. Manual of Socioeconomic Status (urban), Manasayan, Delhi, 1981.
2Base Year of Consumer Price Index for Industrial Workers Revised from 2001 to 2016 – The Hindu. Available from: https://www.thehindu.com/business/Economy/cpi-iw-base-year-revised-from-2001-to-2016/article32916619.ece. [Last accessed on 2021 Apr 09].
3Mishra D, Singh HP. Kuppuswamy's socioeconomic status scale – A revision. Indian J Pediatr 2003;70:273-4.
4Kumar N, Shekhar C, Kumar P, Kundu AS. Kuppuswamy's socioeconomic status scale-updating for 2007. Indian J Pediatr 2007;74:1131-2.
5Employment M of L &. H. Santosh Gangwar Releases Revised Consumer Price Index for Industrial Workers (CPI-IW) Based on New Series 2016=100 from the existing 2001=100; 2020. Available from: https://pib.gov.in/PressReleasePage.aspx?PRID=1666782#:~:text=ThenewseriesofCPI, sinceinceptionofLabourBureau. [Last accessed on 2021 Oct 27].