Aligning Minimum Agricultural and MGNREGA Wages

What is the issue?

The gap between the minimum agricultural wages and MGNREGA wages is growing steadily in the last few years.

What are these wages meant for?

• Minimum agricultural wage - It is paid to agricultural workers.
• It is fixed by the respective state governments.
• The Supreme Court has upheld the minimum wages as a fundamental right.
• Moreover, any labour provided at below minimum wage is a “forced labour”.
• MGNREGA wage - The NREGA was enacted in 2005 for livelihood security.
• The Central Government may, by notification, specify the wage rate for the purposes of this Act.
• This is notwithstanding anything contained in the Minimum Wages Act, 1948.
• Different rates of wages may be specified for different areas.
• Wage rate may be specified from time to time, at a rate of not less than 60 rupees per day.

What is the discrepancy?

• The union government brought MGNREGA wages at par with minimum agricultural wages in 2009.
• Notably, in 2011, only 4 states, Kerala, Goa, Haryana and Mizoram, had minimum agricultural wages higher than MGNREGA wages.
• In 2016, NREGA wages were lower than minimum wages in almost half of India’s states.
• Since then, the gap between the two sets of wages has grown steadily.

What is the latest revision?

• The Union government recently issued the revised wage rates for MGNREGA workers.
• The average wage hike for FY 2018-19 is 2.9%.
• This is only slightly higher than last year’s 2.7%.
• In 2016-17, the average wage hike was 5.7%.
• Some states have seen only Rs 2 increase in daily wages.
• The wages remain unchanged in 10 states.
• These include states like Jharkhand, Bihar, Uttarakhand and Arunachal Pradesh.
• Notably, these are states where the wages are already the lowest.
• Unlike this year, in 2017-18 every state had an upward wage revision, even if marginal.
• With the latest revision, 28 out of 36 states and UTs have NREGA wage below the minimum agricultural wage.

Why is the disparity?

• The Ministry of Rural Development (MoRD) set up the Mahendra Dev (2014) and Nagesh Singh (2016) Committees.
• But the Finance Ministry failed to implement these recommendations.
• The rejection of Mahendra Dev Committee’s recommendations led to the lowest ever NREGA wage increase until 2017.
• Nearly five states received an increase of only a rupee.
• In 2018, the wages hit a new low after the Nagesh Singh Committee’s report was turned down.

What are the recommendations made?

• Mahendra Dev Committee - Workers should be paid either the minimum wage or the NREGA wage, whichever was higher.
• The panel estimated the need for an additional allocation of Rs 6,000 crore.
• This was a 17% increase to the then MGNREGA budget.
• The annual revision of NREGA wages should be based on CPI-R instead of CPI-AL.
• Consumer Price Index-Rural (CPI-R) reflects the current consumption pattern of rural households.
• On the other hand, CPI for Agricultural Labourers (CPI-AL) is based on a 35-year-old consumption basket.
• The Finance Ministry had turned down these recommendations.
• It insisted on setting up a panel to study the financial implications of the Mahendra Dev report.
• Nagesh Singh Committee - There was no need to bring MGNREGA wages on a par with minimum wages of states.
• But, the annual wage revision should be linked to CPI (R).
• As, CPI (R) is a better indicator of wage increase as it gives lower weightage to food items.
• Whereas, the basket of goods for calculating CPI (AL) is mainly food items (up to 72%).

What is Finance Ministry's argument?

• The Finance Ministry, however, argued that moving to CPI-R was not advisable at this stage.
• Besides food items, CPI-R gives weightage to expenses incurred on education, transport and communication, recreation, health, etc.
• The ministry said that these “miscellaneous items” under CPI-R might not represent the demand of NREGA workers.
• Moreover, such a move would lead to a bigger fiscal burden.

Why is raising NREGA wage important?

• The NREGA was primarily enacted for the enhancement of livelihood security of the households in rural areas.
• A Supreme Court’s order mentions MGNREGA work as the last recourse while seeking work.
• A lower payment for this would push the worker and the family into “sub-human existence”.
• On an average, 5 crore rural households rely on the scheme each year for their livelihood.
• This increases in times of rural distress, as people use the scheme to make up for falling farm incomes.
• Nearly 40% of the beneficiaries of the scheme are estimated to have been SCs and STs, bearing a social implication as well.
• The government should address the disparity in the wages to make sense to the purpose of NREGA.

Source: Indian Express