Revision in MGNREGA Wages & Issue of Wage Disparity

The central government has announced a three to 10 percent increase in wage rate for unskilled workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for the financial year 2024-25.

1: Dimension- Issue of disparity in wages under MGNERAGA

• Last year, the Parliamentary panel had stressed on the need to address the issue of disparity in wages under MGNREGA. It had asked the ministry to explore the possibility of making wages uniform across the country.
• It said, “Disparity of wages and non-increase in wages commensurately with inflation is perhaps the most discouraging aspect for labourers to undertake MGNREGA works.”
• The issue of divergence between wage rates under MGNREGA is on account of the fact that the states do not follow a uniform policy of wage revision for minimum agricultural wage. In 2023-24, the lowest wages were in Chhattisgarh and Madhya Pradesh at Rs 221, while the highest was in Haryana at Rs 357.
• Drawing on inflation data, together with the rural monthly wage index published by the Indian Labour Bureau, the Ministry of Finance has observed negative trends in the purchasing power of rural Indian wages in recent years.
  • Thus, in its Economic Survey 2022-23, the Ministry highlighted a negative growth in real rural wages (that is, rural wages adjusted for inflation) due to elevated inflation between April and November 2022.

2: Dimension- The ‘actual’ outcome of wage disparity

• Inadequate labour protection:Although people in rural areas are more likely to be in employment than those in urban ones, they also tend to have jobs that can put them at risk of experiencing inadequate labour protection as well as low pay.
• Insufficient wage to cover inflation: The increase in wage rate may be insufficient to meet the increase in cost of basic goods, which have risen due to spike in inflation in the last few years.
• Decline in the number of MGNREGA household employment demands:The household employment demand has decreased from 8.05 crore in 2021-22 to 6.20 crore in 2023-24.

Way Forward

The fluctuation in wage rates among States is unjustified. Hence, a uniform wage rate is recommended to end the disparity. Bridging the wage disparity will end the uncertainty among beneficiaries and also serve the larger purpose of welfare of MGNREGA workers. The government should devise a mechanism for notifying a unified wage rate across the country.