NREGA v minimum farm wages: How jobs Act is losing out to funds crunch

NREGA v minimum farm wages: How jobs Act is losing out to funds crunch


Low NREGA wages 

What has happened?

The NREGA was enacted in 2005 “for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work….”

Lowest ever NREGA wages

  • The decision to not implement the Mahendra Dev Committee’s recommendations led to the lowest ever NREGA wage increase until 2017, with five states receiving an increase of only a rupee
  • A year later, the wages hit a new low after the Nagesh Singh Committee’s report was turned down

The two Committees 

Mahendra Dev Committee

  • In 2014, the seven-member Mahendra Dev Committee instituted by the Ministry of Rural Development (MoRD) recommended that workers should be paid either the minimum wage fixed by the state or NREGA wage, whichever was higher
  • It also recommended that the annual revision of NREGA wages should be based on Consumer Price Index-Rural (CPI-R), which reflects the current consumption pattern of rural households, and not on the CPI for Agricultural Labourers (CPI-AL), which is based on a 35-year-old consumption basket 

Nagesh Singh Committee

  • In 2016, the government instituted another committee to study the issue
  • This 12-member panel, headed by MoRD Additional Secretary Nagesh Singh, came out with a toned-down version of the Mahendra Dev report in July 2017
  • The panel recommended that “there is no compelling reason” to align NREGA wages with minimum wages of states

Argument against this

A sole member wrote a dissent note in which he reminded the panel of the Supreme Court’s order that “MGNREGA work is the last recourse while seeking work”, and that lower payment would push the worker and his family into “sub-human existence”

The Finance Ministry’s view

  • The Finance Ministry, however, argued that moving to CPI-R was “not advisable at this stage”.
  • Since the implementation of the National Food Security Act (2013), prices of food items have reduced
  • CPI-AL gives 70% weightage to food and tobacco, while CPI-R gives only 59% weightage to food items, with the remaining weightage given to expenses incurred on education, transport, health
  • The Finance Ministry’s said that these “miscellaneous items” such as “health, transport and communication, recreation, education” under CPI-R “may not represent the demand of NREGA workers” and, moreover, such a move would lead to a bigger fiscal burden.
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