States that increase minimum wage will have to bear extra cost from their own resources
A committee set up by the Ministry of Rural Development to revise wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has offered suggestions that are likely to iron out long-standing issues relating to disparity in earnings under the scheme.
Currently, MGNREGA wages are lower than the minimum wages in several States, including in Bihar, Andhra Pradesh and Kerala.
According to a notification from the Ministry dated 15 October 2013, a new committee has been constituted to “suggest a proper index for revising the MGNREGA wage rates every year, by protecting the wages against inflation.”
A key recommendation is that any State which raises the minimum wages arbitrarily will have to bear the extra cost from its own resources. However, this increase will be taken into account once the base index is revised every five years.
The Committee also recommended that “it will be better to link the wages to an established index rather than trying to create a new one.”
“The decision about which index to use is a secondary issue. The significant issue is to link the minimum wages in States to MGNREGA wages. This will even sort out the issues between the Centre and State governments,” Nikhil Dey, a member of the Committee, told The Hindu.
Mr. Dey also reiterated that this was an opportunity to address matters relating to wage disparity.
While the committee is yet to finalise whether to continue with Consumer Price Index (Agricultural Labourers) or pitch for Consumer Price Index (Rural), or even CPI (Rural Labourers), it has recommended that the MGNREGA wages be made equivalent to minimum wages in States.
Currently, wages under the rural job scheme are indexed to the CPI (AL), which has a larger share of the food component and reflects food inflation. The other option before the committee is to index wages to CPI (R).
Both CPI (AL) and CPI (RL) are estimated by the Labour Ministry and the Labour Bureau, while CPI (R) is calculated by the Central Statistical Organisation (CSO).