The average wage rate for unskilled manual workers under the Indian government’s flagship scheme, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), has been growing at a sluggish pace since 2018-19. The average wage rate was ₹207 in 2018-19, growing to ₹259 in 2023-24. This is a compounded average annual growth rate of just 4.5 per cent in this period.
The sharpest increase of 8.71 per cent in wage rate was experienced in 2020-21, when the wages appear to have been increased to help labourers migrating to their hometowns during the pandemic. The growth in 2022-23 was, however, just 1.55 per cent.
The increase in wage rate may be insufficient to meet the increase in cost of basic goods, which have risen due to spike in inflation in the last few years. The increase in wage rate has been insufficient to cover rural inflation in most years.
The Centre’s flagship employment generation scheme aims to provide 100 days of guaranteed employment to every rural household, to the unskilled manual labourers. But in 2009, the Ministry of Rural Development delinked minimum wages from MGNREGA wages which could be a reason why wages under MGNREGA have been slow to grow.
The Centre has, however, been spending a large amount on MGNREGA every year. The Revised Estimate (RE) of the six ‘core of the core schemes’ in 2023-24 amounts to ₹1.08-lakh crore, with 79 per cent of the funds allocated to MGNREGA.
The data shows that in 2023-24, Haryana, Kerala, and Karnataka provided the highest wages to unskilled labour in India, amounting to ₹357, ₹333, and ₹316, respectively.
At the other end of the spectrum are States such as Uttar Pradesh, Bihar and Madhya Pradesh which pay very low wages under the scheme.
The Standing Committee on Rural Development and Panchayati Raj in 2021-22, under the chairmanship of Prataprao Jadhav, critically notes that the fluctuation in wage rates among States is unjustified. Hence, a uniform wage rate is recommended to end the disparity.
However, the social activist and founder member of the Mazdoor Kisan Shakti Sangathan, Nikhil Dey, says, “The standardisation of wages across States may not be a good idea as people’s standards of living, needs, and aspirations differ from place to place. Therefore, the government should consider providing wages in accordance with the local context and requirements.”
The data also indicates a decline in the number of MGNREGA household employment demands. The household employment demand has decreased from 8.05 crore in 2021-22 to 6.20 crore in 2023-24.
Dey points out, “The household demand is bound to decrease as the issue lies in people seeking work under MGNREGA in India; however, they are not consistently finding employment. Additionally, there are problems in MGNREGA, such as delays in receiving wages, too. Consequently, people explore other alternatives, leading to a decline in interest, which could be an important reason behind the decreasing MGNREGA households.”
Abhishek Malhotra, Assistant Professor of Economics at the University of Delhi, said, “In the past few years, besides MGNREGA, the government has also initiated other schemes for generating employment in rural areas such as Mudra Yojana and Lakhpati Didi. This could be one reason for the drop in household demand as well as the allocation of actuals for MGNREGA, as these initiatives aim to make people self-reliant.”