A Half Step

As a sop to the millions of Indians who work on the Mahatma Gandhi National Rural Employment Guarantee Act (MgNREGA) programmes, the central government has decided to index the wage rate in the scheme to the official Consumer Price Index forAgricultural Labourers (CPIAL). This decision was announced within days of Prime Minister Manmohan Singh making it clear that the government cannot set the MGNREGA wages at the statutory minimum in each state in accordance with the provisions of the Minimum Wages Act of 1948.

According to the decision announced by the rural development ministry, workers on the MGNREGA programme will henceforth receive wages that will be indexed to the CPIAL and be revised every year. To begin with, the daily wage under MGNREGA in individual states will be revised over the base rate that was frozen at Rs 100 as far back as April 2009. (The base rate itself is to be revised once in five years and the government is working on a new price index specific to the MGNREGA.) The ministry has been trumpeting that its decision to index wages to the CPIAL will result in a 17% to 30% hike in the wage rate across the states from this month onwards. What it has, of course, refused to highlight is that this “hike” comes after a freeze in the nominal wage rate in MGNREGA for 19 months during which time food inflation has been running at double digits.