It is tragic that the same government that gives huge corporate concessions and loses money in corruption is fighting over minimum wages.
As India's — and by some reckoning the world's — largest rights-based rural safety net programme completes five years, here is a reality check. The National Rural Employment Guarantee Scheme (NREGS) has become the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). But in a monumental affront to the father of the nation, the UPA government has confirmed that it will not be paying minimum wages to MGNREGS workers.
On January 1, 2009, the government froze the (then) NREGS daily wages at Rs.100 and delinked it from the sacrosanct Minimum Wages Act, 1948. The poor had always been underpaid in the Indian labour market. But now, by a single diktat, they were officially condemned to subhuman status, fit not even to earn subsistence-level wages.
Had the Mahatma been living today, he would have been infinitely saddened by the use of his name to sanctify this blatant illegality. In the event, the greatest ever champion of justice for the poor is now the brand name for a programme that denies the lowest legally permissible wages to this section. But such is life and such are governments — in 2003, thanks to a predecessor regime, the Mahatma faced the ignominy of sharing space in Parliament's Central Hall with Vinayak Damodar Savarkar, once accused in his assassination.
In the current case, the hypocrisy is compounded by the paeans sung to the rural wage programme by the Congress and the UPA government in the sunshine aftermath of their May 2009 re-election. The victory was phenomenal by every yardstick. The Manmohan Singh government was the first since 1984 to have returned to office after a full first term. More amazingly, it had hit the bull's eye beating the odds brought about by crippling worldwide recession and spiralling prices. The only explanation that suggested itself was that the voting classes, made up overwhelmingly of the poorer sections, had derived at least marginal benefits from the government's welfare measures, patchy and half-hearted as the latter were. For politicians, the situation offered something to chew on: If half measures could achieve this, what would be the political dividend from a more focussed and better implemented social sector agenda? Indeed, the Mahatma Gandhi prefix to the NREGS was widely read as a thanksgiving to the aam aadmi from a grateful party and government.
The surest way of rewarding the aam aadmi and respecting the Mahatma's ideals in letter and spirit would have been for the government to withdraw the January 1, 2009 order and realign the MGNREGS to the Minimum Wages Act. Instead, in the 20 months since its victory, the government has done all it could to derail the programme. Perhaps the bigger dishonesty is the outward impression it has given of making a superhuman effort to sustain the programme — against mounting fiscal pressures and criticism that the MGNREGS had become a wasteful behemoth.
On December 31, 2010, Prime Minister Manmohan Singh wrote to National Advisory Council chairperson Sonia Gandhi, rejecting the NAC's plea for payment of statutory minimum wages to MGNREGS workers. However, he proposed a compromise: To protect MGNREGS workers from inflation, the government would index the wages to the Consumer Price Index for agricultural labour. This clever sleight of hand was intended to serve two purposes — push the NAC and its supporters to the backfoot and divert attention from the core issue of minimum wages. Overnight, the demand for minimum wages started to look ridiculous and overstated. The debate was pitched in terms of reasonable governance versus fundamentalist social activism. Here was a government exerting its utmost for the poor, going out on a limb to bear the extra burden of indexing wages to inflation. Yet the “NAC and its cohorts” were insisting on a maximalist position on minimum wages. Maximalist position on minimum wages? The irony didn't strike those hyperventilating against the wage programme.
The question before the government was of constitutional propriety: can a duly elected government refuse to implement its own law, more so a government that swore by the aam aadmi for whom the 1948 law was designed in the first place? But rather than accept the obvious answer, the government cosmetically tinkered with the wage programme, passing it off as largesse to MGNREGS workers.
But the illegality does not end here. The UPA government is currently in contempt of the Andhra Pradesh High Court which, in July 2009, suspended the Rs. 100 wage freeze ordered on January 1, 2009 by the Union Rural Development Ministry. But the Central government took no note of the order, resulting in labour groups — which had first moved the court — filing contempt petitions against it.
At a recent seminar on MGNREGS wages, Planning Commission Vice-chairperson Montek Singh Ahluwalia dismissed the issue with the off-hand remark that the Centre would enforce minimum wages for MGNREGS workers if the courts so decreed. He was unaware that the Centre was already in contempt on this issue! When this was pointed out to Mr. Ahluwalia, he amended his position: If the minimum wage in a State was in excess of Rs. 100, the State government would pay the balance. However, for this to happen, the Mahatma Gandhi National Rural Employment Guarantee Act would have to be first amended, of which there is far from being any sign.
In reality, the Andhra Pradesh High Court was only taking forward a position made over and over by the Supreme Court. As former Chief Justice of the Delhi High Court A.P. Shah pointed out at the wages seminar, the Supreme Court, through a series of judgments, had elevated the right to minimum wages “from a statutory to Constitutional status.” The Supreme Court ruled that any remuneration which was less than the minimum wage was “forced labour” or what is commonly understood as bonded labour. The court explained why: “… the first principle is that there is a minimum wage which, in any event must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen in lower wages. The minimum wage is independent of the kind of industry and applies to all alike, big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity ...”
Clearly, it is inhuman and degrading even to argue against minimum wages — doubly so in a country where 92 per cent of the working population is in the unorganised sector, where exploitation of labour and poor enforcement of laws are a given. According to a report of the National Commission for Enterprises in the Unorganised Sector (NCEUS), in 2004-05, 90.7 per cent of agricultural labourers, 64.5 per cent of rural workers and 52.3 per cent of casual non-agricultural workers received wages below the daily national minimum wage of Rs. 66 designated by the Central government.
It is to rectify this dismal situation that Parliament, in 2008, passed The Unorganised Sector Workers Social Security Bill. The law set minimum conditions of work, including an eight-hour work day and payment of statutory minimum wages. But what use is any law if the government wilfully flouts it? In a recent paper, Jayati Ghosh and C.P. Chandrashekhar have shown that even with patchy implementation, the MGNREGS had pushed up wages, especially for women, who form over half of the MGNREGS workforce. One has only to look at the transformative social impact of the mid-day meal scheme in Tamil Nadu to appreciate the long-term effect of this kind of female empowerment on rural families.
Talking to journalists ahead of the 2009 general election, Rahul Gandhi had proudly noted the effect of the rural wage scheme in elevating wage levels across the country. Mr. Gandhi is not a social activist; if anything he has a market vision. So he typically understood the wage scheme from a market perspective: Increased rural spending had to be good for growth.
Tragically, this very factor has today become a reason to fight the programme. The newest argument against the MGNREGS is that rising rural wages is causing inflation and raising the costs of cultivation, rendering the economy uncompetitive. Ms Ghosh and Mr. Chandrashekhar have strongly disputed this argument in their paper. In any case, this is a viciously circular argument coming from a growth-obsessed government. Economic growth is necessary to uplift the poor. But when the poor get just a little money to spend, the economy starts hurting.
In successive budgets, this government has handed huge concessions to corporates. Between 2007 and 2009, tax revenue foregone on account of exemptions under corporate income tax amounted to over Rs.1,31, 000 crore (Venkatesh Athreya, Frontline). Experts have placed the size of the Black Money Economy at anything between 40 per cent and 50 per cent of the GDP. The 2G scam alone has very conservatively cost the exchequer Rs. 50,000 crore. By contrast the 2009-2010 budget allocated Rs. 39,000 crore or about 0.66 per cent of the GDP to MGNREGS. That the government is quibbling over the payment of minimum wages to the poorest of the poor is a shame.