Govt may raise minimum wage for MGNREGA workers

The last time the MGNREGA wages and state minimum wages were aligned was in 2009, but since then several states have announced upward revisions arbitrarily.

By BusinessToday.In  
Thursday, August 23, 2018

Three months after being hauled up by the Supreme Court for admitting to delay in payment of wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and being asked to "take urgent remedial steps to iron out the creases" in the scheme, the Centre is reportedly mulling something better.

According to The Economic Times, the Modi government may consider hiking up daily wages for those who seek employment under the Act in order to align them with the minimum wages of individual states - a long-standing demand. For instance, daily wages under the scheme vary from Rs 168 in Bihar and Jharkhand to Rs 281 in Haryana. However, the minimum wage in Bihar, effective from April 2018, is Rs 237, while in Jharkhand it is Rs 210 and Rs 326 in Haryana.

The last time the MGNREGA wages and state minimum wages were aligned was in 2009, but since then several states have announced upward revisions arbitrarily. The daily added that the government may make an announcement to address the divergence closer to the general elections next year.

Citing a senior government official, the report added that a high-level committee of chief ministers (CMs), headed by Madhya Pradesh's Shivraj Singh Chauhan, is likely to deliberate on the quantum of hike and its financial implications for the Centre soon. The source added that the issue of lower wages had cropped up at the regional conferences held by think-tank Niti Aayog for the sub-group of seven CMs set up to lay out a roadmap for the convergence of the rural jobs guarantee scheme with agriculture.

For the record, the scheme, launched by the UPA government in 2006, provides minimum 100 days of employment out of 365 days in a year to every rural household willing to do unskilled manual work. Since inception, MGNREGA has seen 2,637 crore person days generated along with a total expense of over Rs 4.76 lakh crore.

The government has long yo-yoed on the issue of hiking MGNREGA wages. In the past four years, the government has set up two committees to look into the matter. The first one, a seven-member panel headed by noted agri-economist Professor Mahendra Dev, had recommended in 2014 that MGNREGA workers should be paid the higher minimum wages paid to agricultural workers in the states, if not more, in order to meet their basic needs.

"Consumer Price Index for Rural may be considered as the appropriate index for protecting the wages against inflation [instead of CPI for Agriculture Labour, which is based on the consumption pattern of 1983] and as such the CPI-Rural be adopted for revising wage rates every year under the Mahatma Gandhi National Rural Employment Act," the panel had further said in its report.

But given the financial burden involved, the finance ministry of the day had rejected the suggestion. Then, in 2016, FinMin did a rethink and advised the Ministry of Rural Development (MoRD) to set up a second committee to study the financial implications of the Dev panel's report.

The MoRD's internal Nagesh Singh panel subsequently said there was no need for parity with the minimum wages paid by various states, but agreed that the annual wage revision ought to be linked to CPI (R). In its report submitted last year, the panel estimated the cost burden of aligning wages at Rs 4,500 crore, while the shift from CPI-Agriculture to CPI-Rural was expected to put an additional burden of Rs 2,500 crore on the exchequer. Given the widening fiscal deficit, FinMin finally rejected the Singh panel's recommendation, too, earlier this year.

For the current fiscal, the government has allocated Rs 55,000 crore for the scheme. But given that the average wage hike for the 2018-19 is a mere 2.9 per cent - down from 5.7 per cent in 2016-17 and the worst revision posted under the scheme since its launch - the Centre needs to urgently look into the matter. It's alarming that at a time of spiralling inflation, MGNREGA workers in 10 states reportedly have ended up with the same wage as the previous fiscal.

Edited By Sushmita Choudhury Agarwal

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