The ministry of rural development is in talks with the finance ministry to change the wage calculation methodology for Mahatma Gandhi Rural Employment Guarantee Scheme using Consumer Price Index-Rural instead of CPI-Agricultural Labour. “It is under consideration and the ministry of rural development has agreed with the recommendation of Mahendra Dev Committee. We are in discussion with the finance ministry to take a call on this,” secretary at the ministry of rural development Amarjeet Sinha said. A high-level committee set up by the Centre under economist S Mahendra Dev had suggested that the wages under MGNREGS should be equal to or higher than the minimum wages in states. The committee had also suggested that MGNREGS wage rates be revised every year on the basis of CPI-Rural as it takes into consideration more variables for rural areas as compared to CPI-AL.
The average wages under the scheme were increased 2.7% for 2017-18 following the changes in CPI for agricultural labour. Since the implementation of the National Food Security Act (NFSA) in 2013, ration has been provided at highly subsidised rates. However, while the price of rice has been stagnant at Rs 3 per kg and price of coarse cereals remains at Re1 per kg, the general inflation in non-food items is on the rise. CPI-Agricultural Labour has hardly moved in the last few years as a result of which wages aligned with them have also not risen by much. In fact, for 2017-18 financial year, MGNREGS wages across the country increased by a mere Re1 per day per person on an average for most states. Once wages are linked to CPI-rural, the annual hikes would be more as the weight of food items in the index is less, Sinha said.
“If a revision is done as per this formula, it is estimated that a Rs 4,500 crore addition to the existing MGNREGS budget would be needed,” said an official from the ministry said. For 2017-18, the central government had budgeted Rs 48,000 crore for MGNREGA assuming an estimated 215 crore person-days of work to be provided during the year. This year MGNREGS might get around Rs 55,000 crore, over 4% hike from the 2017-18 budget estimate of Rs 48,000 crore, which was the highest allocation for the scheme since its inception. According to the mid-term expenditure framework of the finance ministry released in August last year, the scheme may be entitled to around Rs 55,000 crore in 2018-19, Sinha added.