Context: 

A Parliamentary Committee has recently highlighted the failure of the MGNREGA to provide economic security to the rural poor and called for upwards revision of MGNREGA wages.

More on the News

• The report was tabled by the Parliamentary Standing Committee on Rural Development and Panchayati Raj.
• It highlighted the persistent issue of low MGNREGA wages and called for increasing current rates to at least Rs 400 per day.
• The Ministry of Rural Development (MoRD), implements MGNREGA.

How are MNREGA Wages Fixed?

Section 6 of the Act provides two methods:

• Section 6(1):  Centre notifies the wage notwithstanding the Minimum Wages Act, 1948 (MWA), but it cannot be less than Rs 60.
• Section 6 (2): Until Centre notifies a rate, the state’s minimum agricultural wage rate will be the NREGA wage rate.

Section 6(2) was adhered to initially until 2009 when the Centre capped NREGA wages at Rs 100. 

The Karnataka High Court (2011) rejected this and upheld the supremacy of the MWA, 1948.

Based on the Central Employment Guarantee Council’s (2010) recommendations, the Ministry of Rural Development currently notifies annual rates for each state indexed against the Consumer Price Index for Agricultural Workers (CPI-AL), with 2009 as the base year.

Issues with NREGA Wages

Divergence from Minimum Wage: For e.g., in FY 25-26, the difference between the MGNREGA wage and the state minimum agricultural wage is as high as Rs 241 in Sikkim. This has led to worker drop-outs from NREGA.

• Supreme Court in Sanjit Roy case (1983) ruled that paying less than minimum wage amounts to “forced labour” under Article 23 of the Constitution.

Inter-state disparity: In FY 25-26, MNREGA wages in Haryana and Nagaland differ by as much as Rs 159. This violates Article 39 of the Constitution which provides for equal pay.

Lethargic State Financing: States can top-up MNREGA wages beyond the Centre’s funding, but only Himachal Pradesh, Jharkhand, and Odisha have exercised this option.

Indexation Issue: CPI-AL covers only agricultural households, while the CPI-Rural (CPI-R) covers households of all rural labourers and is therefore more comprehensive.

Outdated Base Year: Using 2009 as the base year for indexation meant wage rate is not commensurate with market rates and does not factor in inflation.