Rural jobs may soon lose labour intensive label

Scheme : Finance Ministry for changing wage-material ratio to an equal 50:50

Written by Ruhi Tewari | New Delhi | Published: December 13, 2014 2:13:45 am

In a move that could alter the labour-intensive nature of the rural job guarantee scheme, the Finance Ministry has suggested changing the wage-material ratio from the current 60:40 — as provided under the Act — to an equal 50:50.

This comes amid widespread criticism from several quarters of previous Rural Development minister Nitin Gadkari’s proposal to change the labour-material ratio to 51:49.

According to officials in the Rural Development Ministry, the Arun Jaitley-led Ministry has expressed in a note its opinion that the wage-material ratio could be made 50:50, instead of 51:49.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) promises a 100 days of work every year to each rural household, and lays down a labour-material ratio of 60:40. This means that in order to generate maximum employment, 60 per cent of the cost will be spent on paying wages and 40 per cent on materials.

Following Gadkari’s proposal, the Rural Development Ministry had written to the Finance Ministry seeking to know if it would provide more funds to meet wage payments in case its share is reduced. Sources said the Finance Ministry then suggested that the ratio could be changed to an equal one. The note, however, remains silent on whether more funds would be provided.

The proposal could also set off an inter-ministerial clash, with Rural Development Minister Birender Singh recently assuring Parliament that there would be no dilution of the Act and that the wage-material ratio would remain as it is.

The Rural Development Ministry is yet to form up its opinion on the matter.
Altering the wage-material ratio requires only the Schedule to be amended and not the Act itself, hence it does not require legislative approval. Officials claim that increasing the share of the material component is not needed since it has never anyway exceeded 30 per cent in actual practice.

The Centre has been accused of attempting to “dilute” the Act and this suggestion could invite further criticism.

The argument behind increasing the share of the material component is to ensure that more durable assets are created through the scheme. Those opposing the move, however, argue that it would undermine the primary objective of the scheme — creating employment.

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