NREGA wage to be capped at Rs 100

A notification to this effect will be issued shortly. At present,90% of NREGA cost is reimbursed by the central government through rural development ministry.

Finance minister Pranab Mukherjee in his Budget speech had promised to provide a wage of Rs 100 a day as an entitlement under NREGA. In a notification issues on January 1,2009,the government had specified that it would pay states the minimum wage rate for agricultural labourers under the Minimum Wages Act,1948.

Subsequently,many states,including Karnataka,Andhra Pradesh,Punjab,West Bengal,Madhya Pradesh,Tripura and Himachal Pradesh revised their minimum wage rate for agricultural labourers and asked the rural development ministry to amend the notification to bring parity with their revised wage.

Official sources said this led to a situation where the wage rate notified under NREGA stipulations became less than the minimum wage rate for agricultural labourers as notified under Minimum Wages Act in these states. “We will reimburse up to Rs 100 as daily wage to states. If any state wants to give more,it has to do so from their own budget,” a rural development ministry official told FE.

However,the official clarified that the decision would not affect states which already had their minimum wage rates for agricultural labourers above Rs 100 .

After the notification is issued,the government would have to ‘factor in’ the fiscal impact of raising the minimum wage under the NREGA to Rs 100. After three-and-a-half years of NREGA implementation,the Centre has allocated over Rs 50,000 crore to state governments. Nearly two-thirds of this amount has been paid as wages.

The capping of wage rate would help the government manage the fiscal burden under the mega job guarantee scheme. Despite the government assurance to states for providing Rs 100 as daily wage for NREGA workers,the average wage given across the country is Rs 84 at present.

During the current fiscal,the government has already allocated Rs 15,000 crore to states for NREGA implementation and with the opening balance of Rs 10,000 crore from last year,the total allocation stands at Rs 25,000 crore. The allocation of NREGA does not lapse and it is carried forward to the next fiscal.

Under NREGA,employment was provided to more than 4.5 crore rural households last fiscal. For wage payment,more than 7.3 crore savings accounts have been opened with banks and post offices across the country.

These accounts have helped bring in rural poor under the organised banking sector. The government has already announced that workers under NREGA would be provided health insurance cover.