Prelims cum Mains

NREGA v minimum farm wages: How jobs Act is losing out to funds crunch

Details :

The news:
  • After the Finance Ministry rejected the recommendations of two recent government panels, MGNREGA workers in 10 states will get no raises in 2018-19. Minimum farm wages are now higher in many states.
MGNREGA and Minimum wages:
Supreme Court on minimum wages:
  • In cases of Sanjit Roy vs State of Rajasthan and Bandhua Mukti Morcha vs Union Of India & Others (both in 1983), the Supreme Court upheld minimum wages as a fundamental right under Article 23 (Right against Exploitation).
  • The apex court observed that the minimum requirement must exist in order to enable a person to live with human dignity and no State has the right to take any action which will deprive a person of the enjoyment of these basic essentials.
  • It further ruled that any labour provided at below minimum wage is forced labour.
Statutory provisions with regards to minimum wages:
  • The NREGA was enacted in 2005 for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work.”
  • According to the provisions of the Act, the central government bears the full cost of unskilled labour, and 75% of the cost of material (the rest is borne by the states).
  • Section 6(1) of the Act says, Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central Government may, by notification, specify the wage rate for the purposes of this Act”.
  • So, as per Act, wage rate under NREGA has no link with Minimum Wages Act, 1948.
Wage rates – Issues:
Status of MGNREGA wages:
  • Following the last revision of NREGA wage rate, the wages provided by the central government scheme was below the minimum agricultural wage in 28 out of 36 states and UTs.
  • This situation has arisen after the Finance Ministry rejected the recommendations of the Mahendra Dev and Nagesh Singh Committees set up by the Rural Development Ministry.
Mahendra Dev Committee (2014):
  • In 2014, the Mahendra Dev Committee instituted by the Ministry of Rural Development (MoRD) recommended that:
    • The workers should be paid either the minimum wage fixed by the state or NREGA wage, whichever was higher.
    • The annual revision of NREGA wages should be based on Consumer Price Index-Rural (CPI-R), which reflects the current consumption pattern of rural households, and not on the CPI for Agricultural Labourers (CPI-AL), which is based on a 35-year- old consumption basket.
    • The panel estimated the need for an additional allocation of Rs 6,000 crore, a 17% increase to the then MGNREGA budget.
    • The decision to not implement the Mahendra Dev Committee’s recommendations led to the lowest ever NREGA wage increase until 2017, with five states receiving an increase of only a rupee.
Nagesh Singh committee (2016):
  • In 2016, the government instituted another committee to study the issue. Headed by MoRD Additional Secretary Nagesh Singh, the panel came out with a toned-down version of the Mahendra Dev report in 2017.
  • The panel recommended that:
    • There is no compelling reason to align NREGA wages with minimum wages of states.
    • The annual wage revision should be based on the updated CPI-R and not the CPI-AL.
    • Accordingly, the panel estimated that the need for increased NREGA allocation by Rs 2,665 crore, which was less than 5% increase to the then MGNREGA budget.
    • However, the Nagesh Singh Committee’s report was also turned down and the wages hit a new low after that.
The Finance Ministry’s view:
  • The Finance Ministry, however, argued that moving to CPI-R was not advisable at this stage.
    • Since the implementation of the National Food Security Act (2013), prices of food items have reduced.
    • CPI-AL gives 70% weightage to food and tobacco, while CPI-R gives only 59% weightage to food items, with the remaining weightage given to expenses incurred on education, transport, health.
    • So these miscellaneous items such as health, transport and communication, recreation, education under CPI-R may not represent the demand of NREGA workers and, moreover, such a move would lead to a bigger fiscal burden.

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