No trimming of wage rates under NREGA

The Minimum Wage Act is already in place and states notify wage rates. The Centre had decided not to fix the minimum wage earlier since states knew the local economy and were better placed to fix wage rates, Rural Development secretary Rita Sharma told The Indian Express.

In fact,if one goes by the Congress manifesto for the recently concluded elections,the plan is to ensure at least 100 days of work at a real wage of Rs 100 a day for everyone as an entitlement under the NREGA. This would mean an additional requirement of Rs 21,600 crore for the programme on an annual basis.

The Centre had issued a notification in January this year,which in effect capped the minimum wages of individual states at levels prevailing as on January 1,2009. If states want to hike their minimum wage they are free to do so,but the programme will go by the wages as on January 1,2009. The Centre can revise the rate if it is convinced by the individual states justification for a hike, Sharma said. There was,however,no need to peg the NREGA wages lower than the marginal wage rates,she added.

In the last three years since the launch of the NREGA,the average minimum wage rate has jumped 30 per cent to Rs 84 in 2008-09. When the programme was launched,it stood at Rs 65. In 2007-08,it was Rs 10 higher and the next year,went up further by Rs 9 a day. The wage rate varies from state to state ranging from as low as Rs 60 to as much as Rs 130 a day.

Based on the experiences of the last three years,the ministry of rural development has now constituted a special group to consider an increase in the number of days of jobs guaranteed under the flagship programme. However,the higher number of days will have to be fit in with the general equilibrium model on which the scheme operates, Sharma said.

According to government figures,45 million households took advantage of the NREGA in 2008-09. The average number of days of employment was 48. There was sharp regional variation though with Rajasthan at 76 days and Kerala at 22. So,the government may consider an increase based on the appetite of individual states.

Sharma said labour migration has dropped from certain economically laggard states to the more prosperous ones because of NREGA. This would mean more mechanisation in prosperous states. It needs to be seen how this balances out in the context of employment for below poverty line people across the country,she said.

A recent study by think tank NCAER in association with Public Interest Foundation,a non-profit organisation on evaluating the performance of NREGA had recommended a reduction in wage rate under the scheme by up to a fifth to ensure effective targeting. The PIF also said the number of guaranteed days of employment should be increased to 120 from the present 100.

Money matters

• Eight states increased minimum wages in 2007-08,with UP and Rajasthan almost doubling it to Rs 100 a day from Rs 58

• There has been criticism that households that were not BPL were queuing up for jobs under NREGA

• While labour migration has dropped,it needs to be seen how this balances out in the context of employment for BPL people

• Ensuring 100 days work at a real wage of Rs 100 a day would mean additional requirement of Rs 21,600 crore annually

• Since the launch of the NREGA,the average minimum wage rate has jumped 30 per cent to Rs 84 in 2008-09