No change in MGNREGA wage rates observed between 2018-19 and 2019-20 for 4 states & 2 UTs

No change in MGNREGA wage rates observed between 2018-19 and 2019-20 for 4 states & 2 UTs

Non-payment of MGNREGA wages on time to workers and non-revision of daily wage rates, among other things, have kept the poor away from the programme in many states. When the notified daily wage rates under the Mahatma Gandhi National Rural Employment Guarantee (2005) Act (MGNREGA) for 2019-20 was announced on 26th March 2019, it became clear that the existing wage rates were not revised (viz. as compared to 2018-19) in the states of Goa (Rs. 254), Karnataka (Rs. 249), Kerala (Rs. 271) and West Bengal (Rs. 191).

In the Union Territories (UTs) of Andaman (Rs. 250) & Nicobar (Rs. 264) Islands and Lakshwadweep (Rs. 248) too, there is no change in the notified wage rates between 2018-19 and 2019-20. Please check chart-1 for details.   
 
The highest notified MGNREGA wage rate in 2019-20 is noticed for Haryana (Rs. 284), followed by Kerala (Rs. 271) and Nicobar (Rs. 264) Island. The lowest notified MGNREGA wage rate in 2019-20 could be seen in case of Bihar and Jharkhand (Rs. 171 each), followed by Madhya Pradesh and Chhattisgarh (Rs. 176 each), and Uttar Pradesh and Uttarakhand (Rs. 182 each).
 
Chart 1 Notified MGNREGA Daily Wage Rates in Rs. during 2017-18 2018-19 and 2019-20
 
Note: Please click here to expand the chart/ image
Source: Notification for MGNREGA wage rates 2019-20, please click here to access
Notification for MGNREGA wage rates 2018-19, please click here to access
Notification for MGNREGA wage rates 2017-18, please click here to access
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In terms of absolute difference in notified MGNREGA wages rates between 2018-19 and 2019-20, the highest rise is observed in case of Mizoram (Rs. 17), followed by Arunachal Pradesh, Nagaland, Sikkim & Tripura (Rs. 15 each), and Manipur (Rs. 10). In terms of relative difference in notified MGNREGA wages rates between 2018-19 and 2019-20, the highest increase is seen for Mizoram (8.8 percent), followed by Arunachal Pradesh, Nagaland, Sikkim & Tripura (8.5 percent each), and Manipur (4.8 percent). Please consult table-1.  

In case of Himachal Pradesh (Non-Scheduled Areas), Himachal Pradesh (Scheduled Areas) and Punjab, the notified MGNREGA daily wage rates increased by Re. 1 between 2018-19 and 2019-20. The notified daily wage rates went up by Rs. 2 between the two years under discussion for Chhattisgarh and Madhya Pradesh.

Between 2018-19 and 2019-20, the notified MGNREGA daily wage rates climbed up by Rs. 3 in case of Bihar, Haryana, Jammu and Kashmir, Jharkhand and Maharashtra.
 
The degree of dispersion among notified MGNREGA daily wage rates across states and UTs, which is measured by the coefficient of variation, has reduced from 15.09 percent in 2017-18 to 14.4 percent in 2019-20. The average notified MGNREGA daily wage rates across states and UTs was Rs. 201.76 in 2017-18, Rs. 207.62 in 2018-19 and Rs. 210.86 in 2019-20. It means that the average notified MGNREGA daily wage rate in the country grew by 1.56 percent between 2018-19 and 2019-20, whereas it increased by 2.9 percent between 2017-18 and 2018-19. Please see table-1.

Table 1: Notified MGNREGA Daily Wage Rates (in Rs.) during 2017-18, 2018-19 and 2019-20  
 
Table 1 Notified MGNREGA Wages in Rs. during 2017-18 2018-19 and 2019-20 
Source: Notification for MGNREGA wage rates 2019-20, please click here to access
Notification for MGNREGA wage rates 2018-19, please click here to access
Notification for MGNREGA wage rates 2017-18, please click here to access
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It needs to be mentioned here that a previous news alert by the Inclusive Media for Change says that the monthly rate of growth of real wage rate (on a Year-on-Year basis) of rural men in agricultural occupations (12 farm occupations) fell from the peak level of 5.9 percent in May, 2017 to -3.37 percent in January, 2018. The monthly rate of growth of real wage rate (on a Y-o-Y basis) of rural men in agricultural occupations was -1.19 percent in November 2017, -1.48 percent in December 2017, -3.37 percent in January 2018, -2.10 percent in February 2018, -2.07 percent in March 2018, -2.54 percent in April 2018, -2.64 percent in May 2018, -1.45 percent in June 2018 and -1.59 percent in July 2018. The real wage rate of rural men in farm occupations grew (on a Y-o-Y basis) by 2.31 percent in December, 2018. That alert also mentions that  the average daily real wage rates for rural men in agricultural occupations (12 in numbers) grew by -1.76 percent in 2015-16 (viz. Year-on-Year growth), 1.49 percent in 2016-17, 1.65 percent in 2017-18 and a meagre 0.25 percent in 2018-19 (April-December, 2018).
 
Table-2 shows that except Himachal Pradesh (Scheduled Areas) and Nagaland, minimum wage rate for unskilled agricultural labourer is greater than the notified MGNREGA daily wage rate in all states/ UTs during 2019-20. For example, in Goa minimum wage rate for unskilled agricultural labourer exceeds the notified MGNREGA daily wage rate by Rs. 155 in 2019-20 (viz. 61.0 percent)

In the states of Himachal Pradesh (Scheduled Areas), Maharashtra, Manipur, Mizoram, Nagaland, Tamil Nadu, Telangana and Uttarakhand, minimum wage rate for unskilled agricultural labourer has been lower than the notified MGNREGA daily wage rate in 2018-19.

Table 2: Difference between Minimum Agricultural Wage Rate and MGNREGA Wage Rate in FYs 2018-19 and 2019-20

Table 2 Difference between Minimum Agricultural Wage Rate and MGNREGA Wage Rate in years 2018-19 and 2019-20 
Source: Notification for MGNREGA wage rates 2019-20, please click here to access
Notification for MGNREGA wage rates 2018-19, please click here to access
Minimum wage rate for unskilled agricultural labourer in 2019-20 has been provided by the Press Release by NREGA Sangharsh Morcha, dated 30th March, 2019, please click here to access
Minimum wage rate for unskilled agricultural labourer in 2018-19 has been provided by the Press Release by NREGA Sangharsh Morcha, dated 1st April, 2018, please click here to access
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Although the average notified MGNREGA daily wage rate in the country grew from Rs. 207.62 in 2018-19 to Rs. 210.86 in 2019-20 (viz. by 1.56 percent), the average minimum agricultural wage rate increased from Rs. 244.38 in 2018-19 to Rs. 280.04 in 2019-20 (viz. by 14.59 percent). It may be noted that in January 2009, the Government of India issued a notification under Section 6(1) of the MGNREGA, which delinked MGNREGA wages from the Minimum Wage Act freezing MGNREGA wages at the prevailing state minimum wage or upto Rs. 100 per day.
 
The degree of dispersion among minimum wage rates for unskilled agricultural labourer across states and UTs, which is measured by the coefficient of variation, has more or less stayed around 26.0 percent in both 2018-19 and 2019-20. The degree of variation among minimum wage rates for unskilled agricultural labourer across states and UTs has been greater than the degree of variation among notified MGNREGA daily wage rates across states and UTs. Please consult table-2.

Recommendations for revising MGNREGA wage rates every year

Wage rates for MGNREGA workers are notified and revised annually based on Consumer Price Index-Agricultural Labourers (CPI-AL) by the Central Government in accordance with the provisions of Section 6(1) of the MGNREG (2005) Act. The revised wage rates are made applicable from 1st April of a financial year.

A Committee under the chairpersonship of former Additional Secretary of Ministry of Rural Development (MoRD) Shri Nagesh Singh was constituted to study, among other things, the appropriate index for revising MGNREGA wage rates. That Committee recommended using Consumer Price Index-Rural (CPI-Rural) instead of the existing CPI-AL for revising MGNREGA wages every year. The Committee also recommended use of annual average instead of the existing practice of using December month index only. The recommendations of the Nagesh Singh Committee are still under consideration in consultation with the Ministry of Finance.

The issue of divergence between wage rates under MGNREGA and minimum agricultural wages is on account of the fact that the states do not follow a uniform policy of wage revision for minimum agricultural wage, says the Nagesh Singh Committee report.

The Committee was of the opinion that the wage rates under MGNREGA are notified based on scientific principles of indexation. According to the report of Nagesh Singh Committee, wage rate revision should take into account the price level differences across states as the CPI-AL used for indexation of MGNREGA wages is taken for each state separately. The Committee felt strongly that the states should be persuaded to follow a uniform and scientific policy for indexation and notification of minimum wages for agricultural wages. The Committee felt that there was no compelling argument for convergence of minimum wages for agricultural labour and wages notified for MGNREGA workers in view of the differences in activities performed by those two set of workers.

It may be noted by the readers that the MGNREGA wages are paid based on measurement of work done i.e. wages are paid on a piece rate basis. Every state has its defined Schedule of Rates (SoRs) on the basis of which the work output is defined and used to calculate the wages for MGNREGA beneficiaries. The actual wage payable is calculated based on the output of the worker.

In CPI-AL and Consumer Price Index for Rural Labourers (viz. CPI-RL), food beverages and tobacco account for over 70 percent of the consumption basket. In case of CPI-Rural, they account for only 59 percent. The CPI-Rural also provides for higher expenditure on education, medical care and transport and communication.
 
Against the backdrop of the enactment of National Food Security Act in 2013, the rate of inflation of CPI-AL (1986-87=100) and CPI-RL (1986-87=100) will be lower vis-à-vis the inflation rate of CPI-Rural (2012=100) in the recent years. It is because the former two indices give higher weights to food, beverages and tobacco, whereas the latter give lesser weight to them. So, for revising the MGNREGA daily rates (at the state-level) annually, the CPI-Rural (at the state-level) instead of CPI-AL and CPI-RL should be used.

Earlier a Committee on MGNREGA wage rate indexation, which was headed by Prof. S Mahendra Dev, recommended converging MGNREGA wages with the minimum state agricultural wages and then indexing it to CPI-Rural for annual revision. However, the recommendations made by the Mahendra Dev Committee report was not accepted by the government.

References

Notification for MGNREGA wage rates 2019-20, dated 26th March, 2019, please click here to access

Notification for MGNREGA wage rates 2018-19, dated 28th March, 2018, please click here to access
 
Notification for MGNREGA wage rates 2017-18, dated 28th February, 2017, please click here to access

Minimum wages in MGNREGA, Press release by Ministry of Rural Development, Press Information Bureau, 7 January, 2019, please click here to access 

Nagesh Singh Committee draft report on alignment of MGNREGA wages with minimum agricultural wages, submitted to the Ministry of Rural Development in July, 2017, please click here to access
 
Prof. S Mahendra Dev Committee final report on MGNREGA wage rate indexation, submitted to the Ministry of Rural Development in 2015 please click here to access
 
Minimum wage rate for unskilled agricultural labourer in 2019-20 has been provided by the Press Release by NREGA Sangharsh Morcha, dated 30th March, 2019, please click here to access

Minimum wage rate for unskilled agricultural labourer in 2018-19 has been provided by the Press Release by NREGA Sangharsh Morcha, dated 1st April, 2018, please click here to access 

Rural distress is real: Negative monthly growth of real wage rates witnessed in rural areas for 9 consecutive months, starting from November 2017, News alert by Inclusive Media for Change dated 1st April, 2019, please click here to access
 
MGNREGA wages fall below minimum wage in 34 states, Union Territories -Shalini Nair, The Indian Express, 2 April, 2019, please click here to access 

Rural distress and demand up, NREG gets lowest wage hike for 2019-20 -Shalini Nair, The Indian Express, 29 March, 2019, please click here to access 

NREGA Sangharsh Morcha files FIRs for non-payment of wages -Mohammed Iqbal, The Hindu, 1 March, 2019, please click here to access 
 
Report: Rational Minimum Wage Policy (for the Unorganized Sector), dated 1st February, 2011, please click here to access   
 
 
Image Courtesy: Mazdoor Kisan Shakti Sangathan (MKSS)



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