The Curious Case of MGNREGA Wages

पाम ऑयल मिशन को लेकर नॉर्थ-ईस्ट में उपजी आशंकाएं

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Mocking the economic condition of the distressed rural working community, the Union Government has decided to uphold the low wage rates for ten states paid under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 2018-19. In the same breath, the Centre has maintained that 28 of the 36 states and Union territories will continue getting wages much lower than the prescribed minimum wages of the respective states.

As per the revised wage rates issued by the Union government the wages will remain unchanged in states like Jharkhand, Bihar, Uttarakhand, UP, and Rajasthan where the wages are already the lowest compared to some other states of the country. The difference between the wages under the employment scheme and minimum wage is greatest in Tripura, where the MGNREGA wage rate is only 58 per cent of the state minimum wage for agriculture. This ratio is 59 per cent for Sikkim, 64 per cent for Gujarat and 65 per cent for Andhra Pradesh.

While states like Gujarat, Madhya Pradesh and Maharashtra will get a meager wage hike of Rs 2 per day, the state of Tamil Nadu has got the highest hike of Rs 19 per day.

Does expenditure hike address the distress? No.

The dismal wage rate hike has come in the wake of record government expenditure on MGNREGS for 2018-2019 which has seen a jump of more than 37 percent from last year. The Government has announced expenditure of Rs 65,887 crore on the employment scheme for this financial year which is a hike of Rs 25,000 crore than what was spent in 2013-14.

While the government pats its back for increasing the amount spent on the scheme, it refuses to answer justify the almost nil hike in the wages. 11, 43, 04, 000 active workers currently engaged under the scheme would be facing the brunt of the laughable hike.

“A large chunk of the funds spent in 2017-18 went to settle pending dues instead of improving wage rate” said Himanshu, associate professor of Economics at Jawaharlal Nehru University while explaining the contradiction in numbers.

While talking to Hind Kisan, Himanshu underlined, “There is no provision which allows the government to pay wages which is lower than the minimum wages and there is no way it can justify its actions. The government is attempting to dilute the Act itself.”

Rural economy fighting mounting distress

Alarmingly, despite wages paid under MGNREGA being much lower than the standard minimum wage in most states, increasing number of people from rural households are applying for jobs under the employment scheme. This trend is an indicator of the mounting distress in the rural economy which is aggravated by paucity of jobs.

“People who are starving will take up any opportunity that comes their way, as they would rather have something than having nothing at all. But the increasing number of people applying for employment under MGNREGS does not reflect the credibility of this scheme, in fact it goes on to show the failure of the government in relieving the rural population from distress,” said Nikhil Dey while speaking to Hind Kisan. Nikhil Dey is member of the NREGA Sangharsh Morcha which is a country-wide coalition of organisations and individuals.

Photo: CounterCurrents

What stops the government from increasing wages?

One of the major criticisms that surfaced since the Centre announced the wage rate revision for MGNREGA, is its decision of not indexing annual MGNREGA wage revision to Consumer Price Index (Rural) instead of Consumer Price Index (Agricultural Labourers), rejecting expert suggestions. The rationale that had been put forward by experts for replacing CPI (AL) with CPI (R) is that the former calculates the rise in farm laborers’ expenditures mainly on food which constitutes 72 % of its content. Whereas CPI (R) also calculates the expenses on light, fuel, transport, education and recreation, apart from food items.

The Indian Express quoted an official from Ministry of Rural Development saying that since the introduction of National food security Act in 2013 and under the already existing Public Distribution System, several food items are provided at subsidised prices to the poor. Now, the principal factor being food items in the CPI (AL), which is used for indexing MGNREGA wages at present, the increase in consumption expenditure for farm labourers continues to remain low due to subsidized food items. And, the Government continues to use the rural population’s low expenditure on food items indicated by CPI (AL) as an excuse to keep the MGNREGA wage rates below minimum wages.

“The Government has dismissed the Mahendra Dev and Nagesh Singh report on replacing CPI (AL) with CPI (R) because they want to save their money,” said Nikhil Dey.

“As per the Finance Ministry orders, when we based MGNREGA rates revision on CPI (AL), it was found that in 10 states the wages would decrease further from what they were last year. As we cannot lower MGNREGA wages, we decided to at least keep it constant”, said the ministry official as said as quoted by The Indian Express. The daily further reported that had the revision been done as per CPI (R), it would have required an additional budgetary provision of only Rs 2,033 crore.

Expressing concerns over dilution of the employment scheme Nikhil Dey remarked, “MGNREGA is facing some very fundamental challenges. It was the first step towards the Right to Work, which implies the right to employment at minimum wages. But, there are many levels at which this right is being threatened today”. The Supreme Court has also time and again hailed the importance of paying minimum wages and has termed the failure to do so as equivalent to “bonded labour” as per Article 23 of the Constitution.

However, our government still persists on using redundant methodologies for calculating and revising the MGNREGA wage rates. So much so for Acche Din.


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