Central panel says states don’t need to hike NREG pay to match minimum wage

THE PANEL for revision of wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has recommended in its final report that there is no need to ensure parity with minimum wages paid by various states. The report, prepared by a Ministry of Rural Development (MoRD) committee, was recently submitted to Union Minister Narendra Singh Tomar. It states that wages under the rural employment guarantee scheme were last aligned to minimum wages in 2009, and that “there is no compelling reason to align MGNREGA and states minimum wages again”.

The panel had earlier found that MGNREGA wages were lower than the minimum agricultural wages paid in 17 states and Union Territories. On July 10, The Indian Express had reported that the panel estimated a requirement of an additional Rs 4,500 crore in its budget in case both are brought on par.

In 2014, a seven-member expert committee, headed by Professor Mahendra Dev, Vice-Chancellor of Indira Gandhi Institute of Development Research, had held that MGNREGA workers should be paid at least the minimum wages paid to agricultural workers in the states, if not more, to meet basic needs. The report, was accepted by MoRD but rejected by the Finance Ministry citing the fiscal burden involved.

A new panel, under Additional Secretary Nagesh Singh, was constituted on the finance ministry’s advice that the MoRD should set up another internal committee to study the “financial implications” of the Mahendra Dev panel report.

“Since 2009, when MGNREGA wages were aligned with the states’ minimum wages, there has been a divergence because several states have arbitrarily increased their minimum wages without following any scientific principles. There is no reason why the Centre should go by that,” said an official.

While the Union government had claimed that this year’s MGNREGA budget of Rs 48,000 crore is the highest ever, the wage revision this year was at a mere 2.7 percent, the lowest in the scheme’s ten-year legacy leading to a mere Rs 1-3 per day hike in several states.

The ministry panel has agreed to the second recommendation of the Mahendra Dev committee, that the Consumer Price Index for Rural (CPI-R), which reflects the present consumption pattern, should be the basis for annual revision of MGNREGA wage rates, and not CPI- Agricultural Labourers (CPI-AL), which is based on the consumption pattern of 1983. “This, however, would not amount to any significant difference to the individual wages,” said officials, adding that it would require only a Rs 624-crore increase in budget.

Activist Nikhil Dey, who was part of the Mahendra Dev panel, said that states decide on minimum wages based on multiple factors. “The idea that they have increased it to milk the Centre is misplaced as they are not benefiting from higher minimum wages in any way. Moreover, the Supreme Court has held that any payment below minimum wages amounts to forced labour,” he said.

Reetika Khera, a development economist teaching at IIT Delhi, said that merely linking the annual wage revision to CPI-R without first increasing the overall wages does little to increase the existing low wages. “MGNREGA wages have not increased in real terms, ie, after taking into account prices, because the indexation process is inadequate. For instance, in Jharkhand, wages increased by less than Rs 5 over the last two years,” she said.

The MGNREGA wages are far lower than minimum wages in states such as Karnataka, Punjab, West Bengal, Haryana, and Jharkhand. After the recent wage hike, the chief secretary of Jharkhand even wrote to the Centre against the growing divergence between the state’s minimum wage of Rs 224 per day, and MGNREGA wages of just Rs 168 per day.

[http://indianexpress.com/article/india/central-panel-says-states-do-not-need-to-hike-nreg-pay-to-match-minimum-wage-4823220/ September 1, 2017]