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Friday, August 19, 2022

NREGA v minimum farm wages: How jobs Act is losing out to funds crunch

After the Finance Ministry rejected the recommendations of two recent government panels, MGNREGA workers in 10 states will get no raises in 2018-19. Minimum farm wages are now higher in many states.

Nearly 40 per cent of the beneficiaries of the rural jobs scheme have been members of the Scheduled Castes and Scheduled Tribes. (Express Archive)

The last time the union government brought MGNREGA wages at par with minimum agricultural wages was in 2009. Two years later, in 2011, only four states — Kerala, Goa, Haryana and Mizoram — had minimum agricultural wages higher than the notified MGNREGA wages of Rs 100 per day.

Since then, the gap between the two sets of wages has grown steadily. In 2016, NREGA wages were lower than minimum wages in half of India’s states. Following the last revision this month, the wages provided by the central government scheme was below the minimum agricultural wage in 28 out of 36 states and UTs. This situation has arisen after the Finance Ministry rejected the recommendations of the Mahendra Dev and Nagesh Singh Committees set up by the Rural Development Ministry.

Also readNo hike in MGNREGA wages in 10 states

The decision to not implement the Mahendra Dev Committee’s recommendations led to the lowest ever NREGA wage increase until 2017, with five states receiving an increase of only a rupee. A year later, the wages hit a new low after the Nagesh Singh Committee’s report was turned down. In a first, 10 states witnessed no increase in wages, The Indian Express reported on April 1. An average 2.9% increase across the country in April 2018 made no difference to the wages of workers in Bihar, Jharkhand, Sikkim, Tripura, Arunachal Pradesh, Nagaland, Uttar Pradesh, Uttarakhand, Rajasthan and Mizoram. Five states including Maharashtra, Gujarat and Madhya Pradesh saw a Rs 2 increase in daily wages.

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Act versus Act

The NREGA was enacted in 2005 “for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work….”

According to the provisions of the Act, the central government bears the full cost of unskilled labour, and 75% of the cost of material (the rest is borne by the states). On an average, five crore rural households rely on the scheme each year for their livelihood — this number increases in times of rural distress, as people living in villages 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.

Source: Ministry of Rural Development; state data compiled by NREGA Sangharsh Morcha

Section 6(1) of the Act says, “Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central Government may, by notification, specify the wage rate for the purposes of this Act: Provided that different rates of wages may be specified for different areas, Provided further that the wage rate specified from time to time under any such notification shall not be at a rate less than sixty rupees per day.” RTI Activist Nikhil Dey of the Mazdoor Kisan Shakti Sangathan, however, pointed out that “In cases such as Sanjit Roy vs State of Rajasthan and Bandhua Mukti Morcha vs Union Of India & Others (both in 1983), the Supreme Court upheld minimum wages as a fundamental right under Article 23 (Right against Exploitation). It further ruled that any labour provided at below minimum wage is “forced labour”.

In the Bandhua Mukti Morcha case, the apex court observed that “minimum requirements… must exist in order to enable a person to live with human dignity and no State… has the right to take any action which will deprive a person of the enjoyment of these basic essentials.”

Following the last revision this month, the wages provided by the central government scheme was below the minimum agricultural wage in 28 out of 36 states and UTs.

The two Committees

In 2014, the seven-member Mahendra Dev Committee instituted by the Ministry of Rural Development (MoRD) recommended that workers should be paid either the minimum wage fixed by the state or NREGA wage, whichever was higher. The panel estimated the need for an additional allocation of Rs 6,000 crore, a 17% increase to the then MGNREGA budget. It also recommended that the annual revision of NREGA wages should be based on Consumer Price Index-Rural (CPI-R), which reflects the current consumption pattern of rural households, and not on the CPI for Agricultural Labourers (CPI-AL), which is based on a 35-year-old consumption basket.

In 2016, the government instituted another committee to study the issue. This 12-member panel, headed by MoRD Additional Secretary Nagesh Singh, came out with a toned-down version of the Mahendra Dev report in July 2017. The panel recommended that “there is no compelling reason” to align NREGA wages with minimum wages of states. A sole member, N N Sinha, Additional Chief Secretary of Jharkhand, wrote a dissent note in which he reminded the panel of the Supreme Court’s order that “MGNREGA work is the last recourse while seeking work”, and that lower payment would push the worker and his family into “sub-human existence”. Jharkhand, which receives the country’s lowest NREGA wage (see box left), did not see an increase in the wage even this year.


The Nagesh Singh panel’s recommendation — that the annual wage revision should be based on the updated CPI-R and not the CPI-AL — increased NREGA allocation by

Rs 2,665 crore, which was less than 5% of the existing allocation of Rs 55,166 crore.

The Finance Ministry’s view

The Finance Ministry, however, argued that moving to CPI-R was “not advisable at this stage”. “Since the implementation of the National Food Security Act (2013), prices of food items have reduced… CPI-AL gives 70% weightage to food and tobacco, while CPI-R gives only 59% weightage to food items, with the remaining weightage given to expenses incurred on education, transport, health,” explained a panel member.

The Finance Ministry’s said that these “miscellaneous items” such as “health, transport and communication, recreation, education” under CPI-R “may not represent the demand of NREGA workers” and, moreover, such a move would lead to a bigger fiscal burden.

First published on: 20-04-2018 at 02:54:59 am
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