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LATEST NEWS UPDATES | Job scheme-minimum wage link opposed by Ruhi Tewari

Job scheme-minimum wage link opposed by Ruhi Tewari

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published Published on Nov 20, 2010   modified Modified on Nov 20, 2010

The rural development ministry has expressed its reservations on linking wages paid under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with minimum wages mandated by states for farm labour.

In an internal note, which was reviewed by Mint, the ministry said such a step could lead to the states upwardly revising minimum wages for farm labour, an increased burden that the Central government then would have to bear.

The ministry, which oversees the administration’s flagship job guarantee programme, has been under pressure by MGNREGA watchdog Central Employment Guarantee Council and the National Advisory Council (NAC), which sets the Congress-led United Progressive Alliance’s social agenda, to link the wages. NAC chairperson and Congress chief Sonia Gandhi had written to Prime Minister Manmohan Singh to consider paying the mandated minimum wage to people working under the government’s marquee job guarantee scheme, Mint reported on 13 November.

In her letter, Gandhi had suggested bringing MGNREGA wages in line with the minimum wage under a 1948 Act that would involve linking them to the Consumer Price Index for farm workers as applicable for each state and revising them at least once in five years.

“The issue has major legal and financial implications and is, therefore, being considered very carefully in consultation with the finance and other related ministries,” said a ministry official, who spoke on condition of anonymity.

MGNREGA has been one of the government’s most successful welfare programmes, benefiting 35.2 million households in 619 districts. It has a budgetary allocation of Rs.40,100 crore in the fiscal to March.

In the internal note, the ministry has pointed out that states have the power to revise minimum wages under the Minimum Wages Act, 1948, and linking MGNREGA wages with it would mean that if states revise minimum wages at their discretion, the Centre would be legally bound to pay that wage rate for the marquee scheme. The ministry provided an example in Rajasthan, which raised its minimum farm wages to Rs.100 from Rs.73, “in close competition” with Uttar Pradesh, which had raised its minimum wages twice in six months in 2007-08, from Rs.58 to Rs.80 to Rs.100.

S.L. Rao, former director general of the National Council of Applied Economic Research, is against the linking of wages.

“If you have the MGNREGA wages higher or equal to minimum wage, then it would provide an incentive to the rural poor to seek employment under the Act even if jobs are available elsewhere,” Rao said. “And this situation is not in the interest of our country’s productivity”.


Live Mint, 20 November, 2010, http://www.livemint.com/2010/11/19215759/Job-schememinimum-wage-link-o.html?atype=tp


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