Does Centre’s move to hike MGNREGA wages hold any value?

While this news might excite millions of rural workers, in reality, the workers will only be handed disappointment and pain

By Debmalya Nandy
Published: Wednesday 27 March 2019

A recent news report suggests that the Centre has sought permission from the Election Commission (EC) of India to increase wages under the Mahatma Gandhi National Rural Employment Gurantee Act (MGNREGA) from April 1, 2019.

According to the report, this move was necessary as the model code of conduct is in force and it restricts any move by the government to influence voters.

The central government has, however, argued that MGNREGA is an on-going programme and annual revision of wages does not require any change in policy; and hence, the government had sought permission from the EC.

While this news might excite millions of rural workers, in reality, the workers will only be handed disappointment and pain. The same news report indicates that, like the past few years, this year also the government is going to calculate the wages based on the Consumer Price Index-Agriculture Laborer i.e CPI-AL. 

The Ministry of Rural Development (MoRD) calculates the difference between the CPI-AL figure of a given year with the figure from the previous year. For example, to calculate the wages for 2019-20 the ministry will calculate the difference between the CPI-AL figures for December 2018 and December 2017.

Based on the increase, the ministry revises the wage rates. Fortunately as per the guideline of the MoRD, the MGNREGA wage rate of a particular year cannot be less than the previous year’s rate of payment; so in case the CPI-AL figure for December for a given financial year is less than the  previous year’s figure for the same month then the wage rate remains unchanged.

Now, the irony is, this method conveniently ignores the CPI-AL figures for other months and only considers the month of December when the food prices across states are generally low and food items have a far high weight (69 per cent) in CPI-AL.  

Even taking an average figure of the CPI-AL during the year would have been a more rational method. However, the successive central governments never cared about rationality and reality, and thus, this method has become a ridiculous joke on the poor people of India. 

Further, the states which have more food subsidies get lower wage rates as a result of food items having a higher weight in CPI-AL. Hence, an impoverished state like Jharkhand, which is battling with severe hunger and malnutrition, gets no hike in MGNREGA wages.

In the last four years, the wage rate has been hiked to Rs 168 in 2017-18 from  Rs 158 in 2014-15. Despite the fact that even the state government in Jharkhand had conveyed it’s discontent with the MoRD over a Re 1 hike in FY 2017-18, the central government remained tight-lipped.

Jharkhand being one of the poorest states and having huge dependence on MGNREGA, currently has the lowest wage rates and that too has been stagnant due to a flawed wage revision mechanism.

Time and again committees formed by the central government itself have proposed that the MGNREGA wages be linked to the CPI-Rural i.e CPI-RL — in which food and beverages have a lesser weight (54 per cent) and non-food items and other daily use commodities have a higher weight.

This would effectively mean that the central government will be able to increase the wages at a much higher rate. The Mahendra Dev Committee, formed in 2014, had recommended that the MGNREGA wages be linked to the state’s minimum wage.

However, the government did not implement these recommendations and instead formed another committee under Nagesh Singh. This committee rejected the earlier recommendations of linking the MGNREGA wages to the state’s minimum wages, but suggested that the MGNREGA wages be linked to CPI-Rural instead of CPI-Agriculture.

A recently constituted committee under Anoop Satpathy has also recommended that the MGNREGA wages be linked to the CPI-Rural. It suggested that the national minimum wage rate be fixed at Rs 375.

However, the recommendations seem to have fallen on deaf ears. While they were submitted in January 2019, the government has taken no measures to implement the same and according to media reports, a government official has said that the new recommendations will be taken up when the next government is formed.

This will effectively mean that this year, too, the wage revisions will be done on the basis of CPI-AL and the change in wage rates will be in the range of 2-5 per cent — which is negligible considering the current average MGNREGA wage rate of Rs 179 (average across all states).

It will further mean that poor states like Jharkhand will once again be deprived and millions of workers will again feel cheated when the new wage rates are declared.

Hence, even if the EC clears the appeal from the central government, there is not much to look forward to. MGNREGA has become an agonising compulsion for the workers with ridiculously low pay and indefinite delay in payments.

As the rural distress and unemployment levels have hit an unprecedented low, MGNREGA has served as a lifeline for millions, providing a safety net for them but central policies and lack of intent has paralysed the scheme.

Presently, the MGNREGA wage rates of 18 states are below the minimum wage rates; and workers across country have been protesting time and again seeking an increase in the wages.

MGNREGA Sangharsh Morcha, a citizen’s collective working on MGNREGA issues, recently wrote to the Prime Minister demanding that the wages be hiked to Rs 600 as per the recommendations of the Seventh Pay Commission.

Jharkhand Janadhikar Mahasabha, a collective of 30 civil society organisations, has come up with a people’s manifesto, in which it has demanded that the person work days under MGNREGA be increased to 200 days per rural household from the current 100 days.

This could be a wise move to strengthen MGNREGA, which will further result in solid rural assets and infrastructures which will strengthen the livelihoods of locals.

Around 200 days of employment with a wage rate of Rs 600 would ensure Rs 1,20,000 annual income per household, enhance livelihood options and further create solid rural assets for private and community use.

Soil and water conservation measures can also be ensured through MGNREGA.  Rahul Gandhi’s promise of Rs 72,000 as a cash transfer scheme may sound exciting but will face similar struggles and implications. Rather, investing in MGNREGA can ensure comprehensive development of the area.

Negating all these potentials and possibilities  the central government is deliberately undermining MGNREGA  by ignoring key aspects like dignified wage rates and timely payments.

The question remains: why was the government sleeping till now and why did it not take timely measures to ensure that the wages are calculated based on CPI-Rural. This is a question of intent and clearly rural families are not on the Centre's priority.

Subscribe to Daily Newsletter :

India Environment Portal Resources :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.