india

Updated: Mar 14, 2020 09:42 IST

The rural development ministry proposes to increase daily wages for the poor under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) by between Rs13 and Rs32 for the implementation of its flagship job generation programme in the states.

Any upward revision of wages will mean more money in the hands of farmers and could help the government improve slack rural demand that has pulled down overall economic growth. In its annual budget presented on February 1, the government estimated economic growth in the current fiscal year ending March would be 5%, the lowest for 11 years.

National Statistical Office (NSO) data on Thursday showed that food inflation declined from 13.6% in January to 10.8% in February 2020, but remains elevated. Real rural wages have been declining for 10 consecutive months, according to data available until December.

The hikes proposed by the rural development ministry for fiscal 2020-21 have been calculated on the basis of the Consumer Price Index (Agricultural Labour), or CPI (AL), which has been the inflation index to fix labour payments for the rural job guarantee scheme for many years.

There have been efforts to replace CPI (AL) with a CPI (Rural), but the finance ministry is yet to give its final approval for the switchover, government officials said on condition of anonymity.

Many critics have argued that CPI(AL) gives a higher weightage to food items than would the proposed CPI (Rural), and because a large number of rural households are covered under the Food Security Act, which provides them subsidised foodgrains, the cost of food for the poor in rural India hasn’t gone up by much.

Officials indicated that only Maharashtra, where the daily wage now stands at Rs206 under the MGNREGS, may receive the highest proposed hike of Rs32, based on its CPI (AL).

If that indeed happens, the state may get a 20% hike in MGNREGS wages. While the average hike is still being worked out as proposals have not been finalised,states such as Haryana and Sikkim, where current wages are at Rs284 and Rs192, may receive an increase of Rs30.

Uttar Pradesh, India’s most populous state, may receive an increase of Rs13—the lowest proposed hike.

Last year, the Centre received flak for offering a negligible increase in MGNREGS wages. The hike for FY 2019-20 ranged from Rs1 to Rs17 with an average hike of just 2.6% but this year, the proposed higher minimum increase of Rs13 has raised hopes of a more substantial increase.

The new rates would be applicable from April 1, 2020 and the government has just over a fortnight to notify them.

Union rural development minister Narendra Singh Tomar will clear the file before the new rates are notified.

The jobs programme offers 100 days’ assured employment every years to at least one member of every poor rural household at federally fixed minimum wages and 60% of its funds must go to agriculture and allied activities. The scheme completed 10 years in 2016. More than 127 million people are engaged in MGNREGS jobs.

(with inputs from Abhishek Jha)