The Centre should pay heed to the recommendation of a panel constituted by the rural development ministry that MGNREGA wages shouldn’t be aligned with states’ minimum wages. While there has been a demand from states like Jharkhand, Haryana and West Bengal that the Centre close the gap between MGNREGA wages and their respective minimum wages, the panel headed by additional secretary Nagesh Singh estimates this will create a requirement of an additional Rs 4,500 crore. The Singh panel noted that wages under the rural employment guarantee scheme had been aligned with minimum wages in 2009, and that states have since “arbitrarily increased their minimum wages without following any scientific principles”. However, it says that the basis of revision of wages be changed to CPI-Rural that is based on the present consumption pattern, from the CPI-Agricultural Labourer that takes into account a consumption pattern updated last in 1983.
Whether the Centre chooses expedient populism—it did bring its own minimum wage code—over fiscal prudence, especially as the 2019 polls near, may not just yet be clear. All the job-cards issued and person-days generated under MGNREGA may make it seem like serious employment is being created, but one look at the nature of work under the scheme, and it is evident that it is more an unemployment dole. Besides, though it intends to create employment for the really poor, it is the richer states that have been cornering the chunk of its benefits—Tamil Nadu, for instance, accounts for 12% of the 120 crore person-days of work generated so far in the financial year while a much poorer Uttar Pradesh accounts for just 6%. Jharkhand, that recently wrote to the Centre to close the wage gap, accounts for a mere 2.5%. This, despite the average daily wage per person being nearly `22 and `30 lower in Tamil Nadu than in Jharkhand and Uttar Pradesh, respectively. Low wages alone can’t be to blame for the scheme generating little interest among the takers, as another, earlier panel that had backed hiking the MGNREGA wage had argued. On the other hand, MGNREGA wages do distort the labour market.