Government increases wages for NREGS by about 6%, no revision in pay calculation formula

NEW DELHI: The government has dropped the idea of changing the wage calculation formula for its flagship rural jobs programme but has increased the wages about 6% for 2016-17. It has increased allocation to the Mahatma Gandhi National Rural Employment Guarantee Scheme 4% to Rs 38,500 crore for 2016-17 compared to that in the current fiscal.

The scheme would have required an additional Rs 2,000 crore had the wages been increased as per the recommendations of the Mahendra Dev Committee, which favoured calculation of wages on the basis of the Consumer Price Index-rural instead of CPI-agriculture labour.

CPI-rural — a more recent index compared to CPI-agricultural labour and rural labour — would protect workers from inflation taking into account the price changes for the entire rural population of the country, the committee said. Officials said the rural development ministry, which was considering the committee’s recommendations, has decided to study the matter further after the finance ministry raised several questions.
“Revision of the wage calculation method could have helped in making the scheme more attractive for rural poor,” said a senior official, who did not wish to be identified. Many states have complained that wages paid under the scheme fall below the minimum wages for agriculture labour as notified by the state governments and sought revision. Minimum wages differ widely from state to state.

While the minimum wage in Kerala is about Rs 500, it is less than Rs 170 in Bihar. Besides Bihar, Jharkhand, West Bengal and Rajasthan are among the 14 states where wages under MGNREGA are lower than the stipulated minimum wage despite annual revisions. “The idea was to bring the wage rate under the scheme at the same level as the state’s wage rate. The annual increase in the wage rate takes care of this to some extent… we will further study this matter before making any changes in the price index for calculating the wages,” the official said. Experts, however, said that the need of the hour is to improve delivery to drought struck rural population by way of asset creation and timely payments.

“The government has to start focusing on making sure that more people get work under the job guarantee scheme and that payments are made in a timely manner to them…wage rate is not going to address any of these problems,” said NC Saxena, former secretary of the erstwhile Planning Commission.

Allocations under MGNREGA in the coming fiscal will be used for creating at least five lakh farm pond and dug wells in rainfed areas and 10 lakh compost pits for organic manure production. The demand for work under the scheme increased due to deficient monsoon rainfall in various states, with person-day work in the second quarter reaching 45.88 crore and 46.2 crore in the third quarter of the current fiscal.