Question -
Answer -
Base CPI = ₹ 100
Current CPI = ₹400
Base Year Salary = ₹ 4,000
Current Year Salary = ₹ 6,000
When Base CPI is ₹100, then the salary is = ₹ 4,000
Current salary equivalent to base year salary = (Base year salary/100) × CPI of current year
When Current CPI is ₹ 400, then the salary should be
Thus, his salary should be X 16,000 to maintain his purchasing power. Therefore, in the current year his salary should increase by ₹ 16,000 – ₹ 6,000 = ₹ 10,000 so as to maintain the same level of living in the current year as that of the base year.