The wage rate to be linked with Consumer Price Index

Over five-crore workers under the scheme of under the Mahatma Gandhi National Rural Employment Guarantee Act workers across the country will enjoy a 17 to 30 per cent rise in wages with their wage rate being linked with the Consumer Price Index for Agricultural Labour (CPIAL) with immediate effect.

The Ministry of Rural Development issued the notification in compliance with the directives of Prime Minister Manmohan Singh who had, however, differed with NAC chairperson Sonia Gandhi's recommendation for a hike in statutory minimum wages.

Even though the National Advisory Council's recommendation was accepted, the wage rate will be higher than the minimum wage in about 20 States — the statutory minimum is as low as Rs.80 in Arunachal Pradesh and Nagaland and Rs.81.40 in Manipur.

Minister for Rural Development C.P. Joshi denied the presence of any difference between the Prime Minister and Ms. Gandhi on the issue and sought to stress that the hike was the outcome of the NAC chairperson's concern to cover any erosion in wages on account of inflation.

Mr. Joshi said that the government had not turned down Ms. Gandhi's request but had hiked the wages on the basis of the provisions of the Minimum Wages Act, which promises 100 days of employment to households below the poverty level in a year.

The budgetary pronouncement of a real wage of Rs.100 as on April 1, 2009 has now been linked with the CPIAL. The revision of wages will be made annually, for five years, on the base wage of Rs.100. The base wage will be revised only in 2014.

As of now, a 17-30 per cent increase is allowed for in MNREGA wages, differing from State to State. This will entail an additional burden of Rs.3,500 crore during the last quarter of the current fiscal.

The lowest minimum wage under the MNREGA will be in Meghalaya, at Rs.117, while the highest will be in the Nicobar district of Andaman and Nicobar Islands, at Rs. 181.

Despite the linkage of the wage rate with the CPIAL, the MNREGA workers in Andhra Pradesh, Chhattisgarh, Goa, Karnataka, Kerala and Mizoram will get paid less than the prevailing statutory minimum wages.

The Congress-ruled States of Andhra Pradesh and Rajasthan have hiked the statutory minimum wages under the Minimum Wages Act but clarified that this was not applicable to MNREGA workers. These States had asked for linking MNREGA wages with the prevailing statutory wages.

The Minister refused to comment on the payment of statutory minimum wages and maintained that the matter was sub judice. He said the government could act only within the scope of the Job Guarantee Act.

The Ministry is looking forward to the report of the Pranab Sen Committee.