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NREGA, more or less by Sreelatha Menon

A working group on NREGA asks for indexing wages to the farm wage index, besides reducing work hours.

Justice often comes with a price. If workers of the country's only largescale wage employment programme are to be ensured a decent minimum wage for 100 days every year, it is sure to make many others wince.

For, low wages mean more production, cheaper stuff, and so on. The supporters of low wages also argue that they lead to more work as more people can then afford workers.

The National Rural Employment Guarantee Programme, in any case, is not facing a dilemma whether wages should be kept low so that they do not rise in other sectors and make production, industrial and agricultural, expensive.

Here, the debate is whether or not real wages of Rs 100, adjusted to inflation from time to time, should be given to NREGA workers or not.

Recently, the government, keeping its promise made a year ago, set up a task force under the Chief Statistician of India, Dr Pronab Sen, to create a separate index for NREGA wages.

But, a working group on wages for NREGA workers set up under the Central Employment Guarantee Council of the ministry has waved a red flag. The group, under economist and council member Jean Dreze, has said that this is a misguided move. It says it should instead be linked to the Consumer Price Index for Agricultural Labourers (CPIAL), with April 1, 2009, as the "base", so that the real value of the wage is at least Rs 100 per day at April 2009 prices. As long as NREGA wage rates are set by the central government, they should be promptly revised upwards every six months, or at the most every 12 months, in line with an CPIAL.

One more worry is whether an NREGA minimum wage, set by the Centre, violates the Minimum Wages Act. In this context, the group wrote to the ministry this week that it was very concerned about the implicit "overriding of the Minimum Wages Act, 1948, by switching from Section 6(2) to Section 6(1) of NREGA as the basis for setting wage rates.''

Section 6 (2), which was originally followed, said until a wage rate was fixed by the central government in respect of any area in a state, the minimum wage fixed by each state government under Section 3 of the Minimum Wages Act, 1948, for agricultural labourers shall be considered as the wage rate.

On January 1, 2009, however, the central government issued a notification that effectively "froze" state-wise NREGA wages. Later, state governments were allowed to raise NREGA wages up to Rs 100 per day (if they were less than that on January 1, 2009). This new policy effectively activates Section 6(1) of the Act, which involves a potential, if not actual, overriding of the Minimum Wages Act, the group says. According to this Section, the Centre can specify wage rates for this Act. States can make variations but not go below the minimum rate specified by the Centre. The group has sought an amendment in NREGA to avoid actual overriding of the Minimum Wages Act.

A third recommendation by the working group is to keep working hours under NREGA at seven rather than nine. The latter hours have been introduced under a notification of January 2008. All this makes NREGA attractive and makes alarm bells ring wild. These are warnings against the scheme's potential to end existing rural enterprise and prevent new ones. That is a kind of denial to the rural poor of a real chance to be owners and masters of small village economies that can ultimately transform the nation.