NREGS wages rise thanks to inflation

NEW DELHI: Thanks to inflation, the Center has managed to quell the controversy of a zero increase in employment wages under the flagship rural employment guarantee program, a source of fury in recent years.

As the new rates take effect from Wednesday, the national average salary is Rs 202 per day, which is Rs 20 higher than 2019-20. None of the states has recorded a zero increase, while the lowest increase is Rs 13 and the highest is Rs 34.

The positive change of recent years, ironically, has been made possible by an increase in retail inflation for farmworkers - Consumer Price Index () - upon which MGNREGA wages are indexed for annual review.

As inflation has remained low in recent years, the wage revision resulted in insignificant increases, and some states even went to zero. In 2019-20, Goa, Lakshadweep, Andaman Islands and Nicobar saw no increase in wages. This has drawn intense criticism from experts and social activists in recent years.

Given the anomalous situation, the rural development ministry in 2018 urged the finance ministry to change the salary revision index from IPC (AL) to IPC (rural). An internal committee of the DR ministry had recommended the course, arguing that CPI (AL) was an old basket, while CPI (R) better reflected the consumption pattern. Crucially, food represents a considerable weight under the CPI (AL) and its prices have registered a sharp decrease in recent times, especially due to the Food Safety Law. This has kept the pay review under control.

However, the finance ministry has been reluctant to accommodate the DR ministry's request, possibly concerned about the burden it will place on the treasury.

“Since the formula for the salary review remained the same, not much was expected in 2020-21 in terms of changing years past of minuscule or zero hikes. But then the increase in inflation came into play, a senior official told TOI.

As economic activity has been stopped due to the coronavirus crisis, MGNREGA also remains closed for work. However, there may be a sudden surge in demand once the shutdown is lifted and the desperate poor run to seek employment.

This week, the RD ministry issued Rs 4,431 crore to the states as part of the wage and material arrears for this financial year.

Low or no increases have been a problem since 2015. In 2018-19, Uttarakhand, Arunachal, and did not register any increase, while MP, Gujarat and Maharashtra obtained a salary increase of Rs 2. In 2017-18, Bihar, Jharkhand UP and Uttarakhand got a hike of Rs 01.

This year Dadra and Nagar Haveli recorded the highest increase of Rs 34, followed by Maharashtra (Rs 32), UP, Uttarakhand, Manipur and Odisha (Rs 19), Kerala and Assam (Rs 20), Rajasthan (Rs 21) and ( Rs 22). Bihar and Jharkhand have an increase of Rs 23.