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There has been a lively statement successful the past fewer months astir the respective merits of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, oregon VB-G RAM G Act for short. Absent from this debate, however, is simply a captious contented that haunts some Acts: wage rates.
A cardinal parameter
The wage complaint is simply a captious parameter of employment guarantee. A comparatively precocious wage complaint tin make a batch of enthusiasm among workers, arsenic it happened successful the aboriginal days of MGNREGA. And, enthusiasm is important for the occurrence of the programme. Conversely, wage suppression tin easy beryllium utilized to restrain the programme oregon adjacent signifier it retired implicit time. Wage rates, successful immoderate case, besides person a beardown power connected programme costs.
The wage rates of MGNREGA workers are determined nether Section 6 of the Act. This conception has 2 parts. The archetypal part, Section 6(1), empowers the cardinal authorities to notify MGNREGA wage rates. Different rates tin beryllium notified for antithetic “areas”, and successful practice, this has travel to mean antithetic States.
Section 6(2) states that until specified clip arsenic the cardinal authorities notifies wage rates nether Section 6(1), State-specific minimum wages apply. More precisely, MGNREGA workers are entitled to the minimum wage notified by the State authorities for cultivation labourers.
MGNREGA came into unit connected February 2, 2006. Until 2009, the cardinal authorities abstained from notifying wages nether Section 6(1). Therefore, State-specific minimum wages applied. In galore States, minimum wages for cultivation labourers were higher than marketplace wages astatine that time. This is 1 crushed wherefore MGNREGA was truthful fashionable successful those days.
In immoderate States, determination were important increases successful minimum wages betwixt 2006 and 2009. The astir notable lawsuit was a crisp summation successful the minimum wage successful Uttar Pradesh successful 2007-8 (when Ms. Mayawati was Chief Minister), from ₹58 to ₹100 per day. Some observers argued that State governments were indulging successful unrestrained increases successful minimum wages due to the fact that MGNREGA wages were afloat paid by the cardinal government. Others countered that State governments had to wage the aforesaid wage connected their ain nationalist works, and that this would beryllium a restraining factor. They besides argued that, but successful Uttar Pradesh, determination was small grounds of crisp increases successful minimum wages.
The assemblage was inactive retired connected this when, successful precocious 2009, the cardinal authorities pressed the panic fastener and notified MGNREGA wage rates nether Section 6(1). In the abbreviated term, this led to a further summation successful wages, arsenic the cardinal authorities notified ₹100 per time successful astir States, with a top-up successful States wherever the minimum wage was supra that norm. This was sold arsenic a pro-worker move, successful pursuance of a committedness made by the Congress Party successful the run-up to the 2009 wide election. Over time, however, this determination enabled the cardinal authorities to mean the maturation of MGNREGA wages. In fact, the cardinal authorities froze MGNREGA wages successful existent presumption from past on. To this day, wages are raised State-wise each twelvemonth to the grade of terms increases (based connected the Consumer Price Index for Agricultural Labourers), but not more.
Real-wage frost consequences
This real-wage frost rapidly led to 2 superior issues. First, MGNREGA wages started lagging down minimum wages successful galore States, arsenic minimum wages roseate successful existent presumption but MGNREGA wages did not. By 2025-26, the MGNREGA wage complaint was little — often overmuch little — than the minimum wage of cultivation labourers successful astir States, according to a caller investigation by Laavanya Tamang. This defeats an important intent of MGNREGA: sustaining minimum wages. It besides raises the question whether it is astatine each ineligible for the authorities to wage MGNREGA workers little than the minimum wage (this substance was taken up successful the Supreme Court of India but was not intelligibly settled).
The different contented is that MGNREGA wages besides started lagging down marketplace wages. Between 2009 and 2014, existent wages were rising rather rapidly successful agrarian India, partially due to the fact that MGNREGA was tightening the labour market. By 2014, the ratio of MGNREGA wage complaint to cultivation wage was astir 60% for men and 75% for women astatine the all-India level, according to Labour Bureau data. The spread maintained itself from past on, arsenic agrarian wage rates stagnated successful existent terms.
The existent spread is really overmuch bigger than it looks. The crushed is that marketplace wages are not lone higher than MGNREGA wages but besides (generally) paid connected clip – often the aforesaid day. MGNREGA wages, by contrast, are often paid aft agelong and uncertain delays. The cardinal authorities keeps denying this, but the grounds is clear, notably from caller studies by the LibTech group. In fact, not lone are determination delays, sometimes, MGNREGA wages are not paid astatine all, for illustration owed to method failures of the Aadhaar-based Payment System oregon National Mobile Monitoring System. The effect is simply a tremendous “discouragement effect” — galore agrarian workers person mislaid involvement successful MGNREGA.
The lack of immoderate marked diminution successful MGNREGA employment procreation levels whitethorn look to contradict this. A caller investigation of Periodic Labour Force Survey data, however, suggests that MGNREGA employment levels are successful information overmuch little contiguous than they were successful the aboriginal years of all-India implementation, contrary to authoritative statistics. The increasing spread betwixt authoritative statistic and existent employment seems to bespeak a large summation successful leakages successful the aforesaid period.
The discouragement effect and the resurgence of corruption are integrally related. When workers suffer interest, determination is nary vigilance. Worse, workers whitethorn beryllium tempted to cooperate with corrupt elements alternatively of moving by the rules.
Continuing argumentation failure
Unfortunately, the VB-G RAM G Act is each acceptable to perpetuate this crisis. For 1 thing, it does not incorporate immoderate new, constructive provisions that mightiness assistance to guarantee the timely outgo of wages oregon to curb corruption. For another, it continues to empower the cardinal authorities to find wage rates (under Section 10), adjacent arsenic the rationale for this has vanished.
Remember, the statement for an aboriginal power from Section 6(2) to Section 6(1) nether MGNREGA was that, erstwhile wages are afloat paid by the cardinal government, they should not beryllium determined by the State government. Under the VB-G RAM G Act, however, wage costs are shared 60:40 betwixt Centre and States. There was each crushed to driblet MGNREGA’s Section 6(1) from the VB-G RAM G Act and revert to the rule of Section 6(2): guaranteed outgo of minimum wages. Instead, the cardinal authorities did the opposite: it dropped Section 6(2) and retained Section 6(1), giving itself perpetual powers to acceptable the wage rates of VB-G RAM G workers.
There is different contented here. Section 6(1) of MGNREGA began with a non-obstante clause (“Notwithstanding thing contained successful the Minimum Wages Act, 1948”) that acted arsenic a benignant of ineligible fig leafage for overriding minimum wages. Oddly, determination is nary equivalent of this clause successful the VB-G RAM G Act. But then, however tin the cardinal authorities warrant paying thing little than minimum wages?
A mode guardant would beryllium for the cardinal authorities to notify wage rates adjacent to oregon higher than minimum wages successful each States (under MGNREGA oregon the VB-G RAM G Act, arsenic the lawsuit whitethorn be). This would provender galore birds with 1 crumb. It would enactment wage payments connected a dependable ineligible footing. It would pb to a much-needed summation successful existent wages. And, it would besides nutrient a elemental regularisation for updating wage rates implicit time.
More likely, the cardinal authorities volition prolong the real-wage frost and usage it arsenic a means of ensuring that employment procreation nether the VB-G RAM G Act declines implicit time. If so, the wage frost should beryllium challenged successful court. Indeed, with the non-obstante clause removed, the outgo of thing little than minimum wages is patently illegal.
Jean Drèze is Visiting Professor astatine the Department of Economics, Ranchi University, Ranchi, Jharkhand
