'NREGA should have a coherent wage policy'

Experts say the wage must be indexed to inflation

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), accused of taking away labourers from other sectors by offering attractive wages, should have a coherent wage policy consistent with the law, especially with the Minimum Wages Act, feel experts.

Experts participating in a workshop organised by the University of Allahabad felt there could be a national minimum wage for the scheme but it would require amendments to both the Minimum Wages Act and the National Rural Employment Guarantee Act (NREGA).

Fifty academics, policy makers and activists, under the leadership of economist Jean Dreze, passed a resolution stating that “the current wage rate of Rs 100/day must be immediately indexed to the price level (using the Consumer Price Index for agricultural labourers, with April 1, 2009, as the base year), so that the purchasing power of MGNREGS wages is not eroded by price spurt”.

In fact, Finance Minister Pranab Mukherjee, in his Budget speech in July 2009, had said, “We are committed to providing a real wage of Rs 100 a day as an entitlement under the MGNREGA.” Experts feel this is more relevant today in the context of rapid increases in food prices.

Lack of a coherent wage policy is responsible for this confusion over wages even in the fifth year of the Act’s implementation. The Act states wages have to be paid according to the “wage rate”, a rather ambiguous term, while the Minimum Wages Act asks states to decide and revise it according to the Consumer Price Index from time to time.

Under Section 6 (1) of the MGNREGA, until the Centre notifies a wage rate for a particular state, agricultural rates will apply. However, in December 2008, the Centre notified Rs 80 as wages to all states which were paying less than this for MGNREGS.

Lured by the massive funds offered under the scheme, states increased rates. In Uttar Pradesh, wages were doubled overnight. Since 2008, the Congress has been promising a real wage of Rs 100. But the government merely issued a notification raising wages to Rs 100 for MGNREGS. Last year, the Centre froze the minimum wage as if to cap its commitments to the Act, leading to concern among activists that the case of the MGNREGS workers getting price immune minimum wages was nearly lost.

The resolution passed in the workshop will be sent to the rural development ministry, whose secretary BK Sinha was one of the participants.

Said Planning Commission Member Abhijit Sen, “I strongly feel that there should be a national minimum wage, and if the states wish to pay more, they are free to do so.”

K Raju, principal secretary to the chief minister of Andhra Pradesh, was quick to point out that such a move would violate the Minimum wages Act, unless it was indexed to prices.

But the consultation managed to arrive at an unanimous view on the matter endorsed by both Raju and Sen as well as representatives from the Uttar Pradesh government. Participants, including Dreze, Aruna Roy, Nikhil Dey and Arundhati Duru, felt that the current rate of Rs 100 per day must be immediately indexed to the price level, so that the purchasing power of MGNREGS wages is not eroded by price increases.

The proposed move would also result in different wages in different states, so the Centre would be forced to shell out money more than Rs 100 to some states while it would be less in others.

Jean Dreze said, “This is the most crucial issue in MGNREGA today and has to be resolved immediately, before the value of the minimum wage gets eroded. It is integral to the law and it is not being implemented.”