Economy

MGNREGA wages up about 11%; yet at least 40% lower than minimum wages

Tina Edwin New Delhi | Updated on March 29, 2020 Published on March 29, 2020

The average per day wage rate for unskilled work under the Mahatma Gandhi National Rural Employment Guarantee Scheme will rise 11 per cent from ₹182 to ₹202 for the fiscal year 2020-21, the biggest increase since the National Democratic Alliance came to power at the Centre in May 2014. The last big increase in wages came in 2015-16, when the average wage rate was increased by 7 per cent. For 2019-20, the average wage rate was almost unchanged, with a rise of just 1.6 per cent.

The revisions for 2020-21 were due to be notified end-March, as is regular practice, although, the announcement was part of the Covid-19 related relief package announced by the Finance Minister.

Although the MGNREGA wage notified for 2020-21 is substantially higher, it continues to be 40-50 per cent lower than the minimum wages paid to unskilled agricultural workers. The minimum wages are revised twice a year by the chief labour commissioner, when the variable dearness allowance is adjusted to changes in the consumer price index. The prevailing rates for unskilled agricultural workers are between ₹347-383 per day, depending on the region of employment.

Major variations

There are big variations in the revision to the MGNREGA wages, notified on March 23 and announced by FM on March 26. The increase varies between 7-16 per cent, with wages for MGNREGA workers in Maharashtra rising by 16 per cent. In contrast, the increase in Kerala, West Bengal, Himachal Pradesh and some northeastern States was only 7 per cent. The wages were increased by 13 per cent in Bihar, Jharkhand and Gujarat, by 12 per cent in Andhra Pradesh, Telangana and Tamil Nadu and by 11 per cent in Rajasthan.

In Karnataka, Odisha, Uttar Pradesh, Uttarakhand, Assam and Goa, the increase in wages was 10 per cent. In Punjab and Haryana, wages increase is 9 per cent and in Chhattisgarh, Madhya Pradesh, Jammu and Kashmir and Ladakh, 8t per cent.

CPI-linked changes

The MGNREGA wage revision is linked to the changes in the Consumer Price Index for Agricultural Workers (CPI-AL). A committee set up by the government had recommended using CPI-Rural (CPI-R) instead of the existing CPI-AL for revising MGNREGA wages every year. It is not clear if this recommendation has been accepted during the current revision of wages. Neither the Finance Ministry nor the Rural Development Ministry has made a statement on that.

There is also a big variation in the wages paid to MGNREGA workers across States. Workers in Haryana will be entitled to ₹309 per day for work done in 2020-21, up from ₹284 in 2019-20, while in Madhya Pradesh and Chhattisgarh, they will be entitled to ₹190 per day, up from ₹176 currently.

Published on March 29, 2020

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