Job scheme may need more funds if govt accepts panel's proposals

New Delhi: Wages under the rural jobs scheme are set to go up in some states if the recommendations of a high-level committee are accepted by the Union government. Accepting the proposals would require an upward revision in the budgetary allocation earmarked for the scheme under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

A seven-member committee constituted by the Centre in October, headed by economist S. Mahendra Dev, has proposed that MGNREGS wages should be equal to or higher than minimum wages for agricultural labour for a state and revised using the Consumer Price Index (Rural) to account for inflation.

Assuming 229 crore person-days of work in a year (2012-13 figure) the scheme will cost the Centre ₹ 40,209 crore, the report said. The Union Budget presented this month allocated ₹ 34,000 crore towards MGNREGS in 2014-15, a marginal rise from ₹ 33,000 crore in the previous year.

“Minimum wages are a standard that cannot be breached, but in about 12 states MGNREGS wages are less than that,” said Nikhil Dey, a member of the committee and part of not-for-profit organization Majdoor Kisan Shakti Sangathan. “In 2010-11, the budgetary allocation for MGNREGS was over ₹ 40,000 crores. The allocation this year is a pittance when one accounts for inflation.”

There was no word from the rural development ministry on whether it would accept the Mahendra Dev committee’s proposals.

On 11 July, the Supreme Court upheld a Karnataka high court order directing the Centre to pay MGNREGS wages at par with the state minimum wages Act. The minimum wages for agricultural labourers in Karnataka is ₹ 236.5 (2013-14), against ₹ 191 notified by the Centre in February this year.

Other states where notified minimum wages are higher than MGNREGS wages include Rajasthan, Kerala, West Bengal, Jharkhand and Andhra Pradesh.

“Minimum wages in states like Kerala are much higher than in Orissa or Bihar. If the minimum wage in Kerala is ₹ 500, will you pay the same amount to one worker in Kerala or five workers in Orissa or Bihar?” asked N.C. Saxena, a former secretary in the Union ministry of rural development. “The UPA (United Progressive Alliance) government did not accept the proposal to make MGNREGA wages equal to minimum wages. The state governments determine these wages. Uttar Pradesh, for example, fixed the minimum wage and then changed it several times in the course of the year. So it would have been difficult for the central government to match these wage revisions.”

MGNREGS, which promises at least 100 days of manual work to one member of every rural household, was the flagship scheme of the Congress-led UPA government, which lost power in the April-May Lok Sabha election.

“The key issue is whether we are creating productive assets through MGNREGA. If wages are delinked from productivity, sooner or later the programme is bound to collapse,” said Ashok Gulati, chair professor of agriculture at the Indian Council for Research on International Economic Relations.

“Revising wage rates without increasing productivity means higher costs of agricultural labour, which shows up as higher food prices. It’s time we learn not to disturb input prices to address the equity issue,” he said.

In a related development, the Union ministry of rural development on Monday made it mandatory that at least 60% of works under MGNREGS in terms of costs has to be for creation of productive assets directly linked to agriculture and allied activities “through development of land, water and trees”.

This is in accordance with the new Bharatiya Janata Party-led government’s decision to converge MGNREGS with agriculture and creation of productive assets.