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LATEST NEWS UPDATES | Centre sits on wage hike nudge -Basant Kumar Mohanty

Centre sits on wage hike nudge -Basant Kumar Mohanty

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published Published on Apr 5, 2015   modified Modified on Apr 5, 2015
-The Telegraph

New Delhi: The yearly wage revision for the rural job guarantee scheme has for the first time missed its April 1 deadline, with the government having sat for nine months on expert advice for a sizeable hike.

Sources said the rural development ministry would next week notify an interim wage increase, based on the existing formula for yearly revisions, while the finance ministry weighs the expert panel's July recommendations.

There are no indications what the finance ministry's final decision might be on the report of the committee, headed by economist Mahendra Dev.

Under the panel's preferred formula, the government must this fiscal year pay the scheme's workers whichever is the higher between these two wage rates:

* The minimum wage in the workers' home state, as notified by the state government; or

* The revised job scheme wage for the state as calculated under the existing formula for yearly revisions.

Accepting the panel's suggestion would force the government to change a stand it has - so far unsuccessfully - adopted in the courts under Manmohan Singh as well as Narendra Modi. The dispute has a history.

In the first two years of the job scheme, the wage rates had been the same as the minimum agricultural wage rates of the states concerned. But in 2008, the Centre detached the scheme's wages from the states' minimum wages and linked them instead to the states' Consumer Price Index for Agricultural Labourer (CPIAL).

This measure tracks the yearly inflation in the retail prices of goods and services consumed by agricultural labourers in that state.

However, some states have since then raised their minimum wages far beyond their CPIAL. By the time the job scheme's wage rates were notified for the last fiscal year, it was less than the minimum wages in 12 states, including Bengal, Bihar and Jharkhand.

Already, in July 2011, Karnataka High Court had asked the Centre to pay the state's job scheme workers the state's minimum wages - complete with the arrears since 2008 (when the central rate fell behind Karnataka's rates).

Fearing a precedent for all states, the Centre kept fighting the case in the Supreme Court but lost the challenge and the review plea, and is left with the option of a curative petition.

The Centre's argument is that adopting the states' minimum wages would selectively benefit job scheme workers in states that periodically raise their minimum wages and hurt workers in states that do not.

In 2013, the UPA government set up a committee to suggest the baseline wage rate and an ideal formula to revise it in subsequent years. In its report last July, the committee said the baseline - applicable to 2015-16 - should be whichever was higher between a state's minimum wage and the current job scheme wage for that state.

In subsequent years, the committee said, the rate should be revised on the basis of the Consumer Price Index for Rural Labour instead of the CPIAL.

Sources said the rural development ministry had accepted the report in principle and was awaiting the finance ministry's decision.

Social activist Nikhil Dey, who was a member of the expert panel, criticised the delay in the government's decision.

"The delay should not hurt the workers," he said. "The Centre should notify (an interim) revised rate in accordance with the existing formula."

Ministry sources said this would be done next week.

Former National Advisory Council member Harsh Mandar said that paying the job scheme's workers less than their state's minimum wage was "unethical", and the delay in wage revision was an "injustice".

N.C. Saxena, also a former member of the National Advisory Council, cited another problem: slow funds release to the states that delays the payment of job scheme wages.

The Mahatma Gandhi National Rural Employment Guarantee Act, which guarantees up to 100 days' employment in a year to every rural household, has nearly nine crore beneficiaries.


The Telegraph, 5 April, 2015, http://www.telegraphindia.com/1150405/jsp/nation/story_12770.jsp#.VSCWU-Fr9U8


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