Paper: GS – III, Subject: Economy, Topic: Inclusive Growth, Issue: “MGNREGA to VB-G RAM G: The Missing Minimum Wage Assurance”.
Context:
There is an ongoing debate on rural employment policies, especially between MGNREGA and the proposed Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025. The article highlights a critical concern that has been largely ignored in this debate, which is the issue of low and inadequate wage rates.
Key Takeaways:
Background:
- MGNREGA, enacted in 2005, guarantees 100 days of wage employment to rural households.
- Wage rates are determined under Section 6 of the Act, either by the central government or linked to state minimum wages. Initially, state minimum wages were applicable, and in many cases these were higher, making the scheme attractive.
- However, After 2009, the central government began notifying wages, leading to gradual control and moderation of wage growth.
Present Issue and Content:
- Wage rate as a key parameter: Wage rate is a central factor determining the success of employment guarantee programmes. Higher wages generate enthusiasm among workers and increase participation. Lower wages discourage workers and can weaken or gradually phase out the programme.
- Change in wage determination: Initially, workers received state minimum wages for agricultural labour, which were high and reasonable. After 2009, the central government began fixing wages under Section 6(1). Wage increases were thereafter linked only to inflation. This led to limited real wage growth over time and increase seen was only nominal.
- Real wage freeze and its consequences: MGNREGA wages have effectively remained stagnant in real terms. In many states, MGNREGA wages are lower than statutory minimum wages of the state and prevailing market wages. This undermines the legal and economic purpose of the scheme, which is to ensure minimum livelihood security.
- Other issues – Payment delays and technological issues: Workers frequently face delays in wage payments. There are instances of non-payment due to technical failures in Aadhaar-based systems. Delayed and uncertain payments reduce trust in the scheme. This creates a discouragement effect, leading to declining participation.
- Leakages and corruption: Reduced worker participation leads to weak local monitoring. This increases the scope for corruption and leakages. The gap between official data and actual employment may reflect inefficiencies rather than real job creation.
VB G RAM G Act 2025:
- It proposes to replace MGNREGA with a framework aligned with infrastructure and development goals.
- It increases employment guarantee from 100 to 125 days per household.
- It introduces a 60:40 Centre-State funding model for wages.
- It integrates rural employment with initiatives such as Gati Shakti and local development plans.
- It promotes digital systems, biometric authentication and data-based monitoring.
Policy Failure:
- The Act fails to address core issues in the existing system.
- It does not provide strong provisions for timely wage payments or corruption control.
- Central government continues to control wage determination.
- The 60:40 funding model shifts financial burden to states.
- It weakens the principle of guaranteeing minimum wages.
Legal Concerns: MGNREGA had a clause overriding minimum wage law, creating ambiguity. The new Act lacks such a provision. This raises questions on legality of paying wages below minimum wages. It creates scope for judicial challenges.
Source: (The Hindu)
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