Too Little, Too Late

Atanu Chakravarty

The Ministry of Rural Development revised wages of MGNREGA workers by 3 percent to 10.5 percent for various states for the financial year (FY) 2024-25 after getting a nod from the Election Commission of India in the thick of Parliamentary Elections. As per the latest available data, the total NREGA active workers is 14.34 crore, and the nationwide average days of employment provided per household (HH) was 51 days. The revised wages are effective from April 1.

MGNREGA is one of the flagship poverty alleviation programs, and this legal entitlement was the product of a people's movement that was inspired by the Maharashtra Employment Guarantee Act, of 1977. This was the outcome of a powerful grassroots socio-political movement after the drought that wrecked havoc in the state during 1970-73. (Fifteen Years of India's NREGA: Employer of the last resort? Swati Narayan). This is one of the few public entitlements where women are paid equal wages with men for unskilled labour.
Wage rates are revised every year, using CPI-for Agricultural Labour (CPI-AL) taking 2010-11 as the base year. In February this year, The Parliamentary Standing Committee on Rural Development and Panchayati Raj noted that "the practice of revising wages keeping CPI- AL values taking 2010-2011 as the base is not coherent with the present inflation cost of living".

In terms of maximum increase in wages compared to last year, Goa (10.56 percent) and Karnataka (10.4 percent) increases are the highest, while wage rates in Uttar Pradesh and Uttarakhand will see the lowest increase at 3 percent for FY 2024-25. Goa got the highest increase of Rs 34 per day. The revised wage is now Rs 356 per day compared to last year's Rs 322 per day, which is a 10.56 percent year-on-year hike. But the average wage of all states and Union territories for the financial year 2024-25 is around Rs 284 per day, which was Rs 267 last year.

The government-appointed Mahendra Dev Committee strongly recommended linking NREGA wages with state minimum wage and to index rural labourers (CPI-RL) instead of the Consumer price index of agricultural labourers (CPI-AL) or fixing Rs 375 per day as proposed by Anoop Satpathy Committee. Sadly, the Central government has not implemented these recommendations. The meager increase has never been adjusted with inflation and cost of living in the past few years. The wages paid are calculated based on a piece rate and not a daily wage. This piece rate is anchored on a wage rate stipulated by the central government which is revised every financial year as mentioned earlier.

The newly revised wages are much lower than the earnings of agricultural labour which is Rs 105 lower than the daily wages for agricultural labour as of 2023. The parliamentary standing committee also noted that the daily wages of NREGA as of FY 2023-24 were lower than the daily wage for agricultural labourers as of FY 23 in all major states except Gujarat.

The difference between the NREGA daily wage and that of the agricultural daily wage was highest in Kerala, where the daily wage of the former for FY 2023-24 was Rs 333 while the daily wage of the latter for FY 2022-23 was Rs 764.3–a difference of Rs 431! After the newly revised wage, for Kerala, it is now Rs 346, an increase of 3.9 percent.

The central government has not transpired the methodology of calculating NREGA wage every year, which is extremely arbitrary and an assault on the worker's rights. However a few states like Jharkhand hiked wages of NREGA workers from Rs 198 to Rs 225 from their state budget. Notwithstanding the legal obligation of this unique poverty alleviation scheme, the Modi Government repeatedly unleashed an attack on NREGA, introduced an unprecedented ceiling on the expenditure by State governments, deletion of lakhs and lakhs of workers from their muster roll by making Aadhaar-based payment system mandatory, delayed payment system has created a huge number of disgruntled workers who have moved away from this work to another job. While the proposed demand of budgetary allocation was Rs 98,000 crore in 2023-24, only Rs 60,000 crore was allotted. Reduced budgetary allocation negatively affected the timely release of wages and materials, the Parliamentary Standing Committee noted. For example, 57 percent of wages were not paid within the stipulated time, in 2019-2000 Rs 10,000 crores were pending as wages, material, and administrative costs due to inadequate budget.

MGNREGA has emerged as the world's biggest public works program and also proved to be the employer of last resort across rural India. In 2020-21 NREGA employed an unprecedented 76 million rural HH. The moot question is, since this is a government program, why the government is denying to pay minimum wages? Why the legality of wages will be based on budgetary constraints?

A week before, the panelists at the Mint India Investment Summit, 2024 observed, that improving consumption, especially in rural areas, and addressing the pervasive income inequity remain a significant challenge for India.

Increasing wages of the workers engaged in NREGA, adjusting it to rising inflation, and to pay wages not below the State level of minimum wages are some of the challenges this program is facing, which should be resolved on a priority basis.

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Vol 56, No. 43, Apr 21 - 27, 2024