New Delhi: The government on Thursday raised the minimum wage for daily labourers by 15% to 115 in a move that can potentially benefit 20 million workers in sectors such as construction, agriculture and stone breaking.

The revision, effective 1 April, is based on the consumer price index for industrial workers, which rose by 10.95% between April 2010 and February.

Pronab Sen, principal adviser to the Planning Commission, said the hike makes the general wage rate consistent with wages paid under the government’s flagship rural jobs scheme, which were revised in January.

Wages paid under the Mahatma Gandhi National Rural Employment Guarantee Scheme were linked in January to the consumer price index for agricultural labourers for each state. The rural development ministry, which oversees the scheme, estimated this would increase wages by 17-30%.

Sen, however, said the Union government’s minimum wage rate for daily workers is only prescriptive. “Nothing compels state governments to hike their wage rates."

Labour and employment minister Mallikarjun Kharge has written to all chief ministers requesting them to revise their wage rates. “In order to have a uniform wage structure and to reduce the disparity in minimum wages across the country, national floor level minimum wage is fixed, which also requires to be revised from time to time," Kharge wrote in his letter, a copy of which has been reviewed by Mint.

The labour ministry has for some months been considering a move to amend the Minimum Wages Act, 1948, to make the minimum wage statutory and fix minimum wages for all forms of employment.

The hike in minimum wages could lead to a further rise in prices, analysts said.

“This may not have much impact in the rural areas as the rural job scheme already pays a higher wage," said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy. “I do not see any production activity taking place at the revised wage rate either in urban areas."

The minimum wage for daily workers was previously revised to 100 from 80 from 1 November 2009.

The Centre for Indian Trade Unions said the 15% hike was hardly enough, particularly with inflation being high. Food inflation under the wholesale price index has been in double digits since June 2009.

“Can a family of four survive in today’s world with just 115?" the labour organization’s vice-president M.K. Pandhe said. “Government’s wage policy needs to be revised and linked to the objective of poverty alleviation."

Twelve states had higher minimum wage rates than the 100 prescribed by the government before the latest hike, Sen said.

The Union government had set up five regional committees to reduce regional disparities in minimum wages for similar work. The disparity, said the labour ministry, is due to differences in socioeconomic and agro-climatic conditions, paying capacity, productivity and other local conditions influencing the wage rate.