Monday, April 8, 2019

2019 (missing) reports: MGNREGA: Wages remain below the minimum wages, yearly hikes too little since 2017 & NYAY: Decoding the math behind Rahul Gandhi’s poll vow

 MGNREGA: Wages remain below the minimum wages, yearly hikes too little since 2017

The rural employment guarantee scheme, better known as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), may have come a long way from its day of infamy as the "monument of United Progressive Alliance's (UPA) failure" in 2015 to witness the highest ever allocation - Rs 60,000 crore - in this year's budget.

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MGNREGA
MGNREGA aims to guarantee the 'right to work'.(Image for Representation).

HIGHLIGHTS

  • Wage hike was zero for six states/UTs in 2019 and 10 states in 2018
  • Most states/UTs (between 19 and 21) have seen wage hike from Rs 0 to Rs 5 since 2017
  • On March 28 this year, the rural development ministry notified revised wage rates for 34 states and UTs

The rural employment guarantee scheme, better known as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), may have come a long way from its day of infamy as the "monument of United Progressive Alliance's (UPA) failure" in 2015 to witness the highest ever allocation - Rs 60,000 crore - in this year's budget but the wages being paid continue to remain too low and revisions too insignificant.

On March 28 this year, the rural development ministry notified revised wage rates for 34 states and union territories (UTs) - except Chandigarh. Contrary to what could have been expected, this being the election year, the revisions were as shocking and disappointing as it has been in the past few years.

For example, six states and UTs saw zero revision (same as in 2018) - Goa, Karnataka, Kerala, West Bengal, Andaman & Nicobar Islands and Lakshadweep.
Two states saw an increase of Rs 1 from 2018 - Himachal Pradesh and Punjab - and another two of Rs 2 - Chhattisgarh and Madhya Pradesh.

Only six states saw an increase of wages more between Rs 10 to (a maximum of) Rs 17, all of which are in the North-eastern region - Arunachal Pradesh, Manipur, Mizoram, Nagaland, Sikkim and Tripura.

This is a pattern which remains unchanged at least since 2016 - the year from which wage rates are available in the official web site.

In 2018, there was zero increase in wages in 10 states - Arunachal Pradesh, Bihar, Jharkhand, Mizoram, Nagaland, Rajasthan, Sikkim, Tripura, UP and Uttarakhand.

Six states and UTs saw a hike of Rs 2 - Chhattisgarh, Gujarat, MP, Maharashtra, Dadra & Nagar Haveli and Daman & Diu. Only 11 states and UTs had an increase of Rs 8 or more (a maximum of Rs 19 in Tamil Nadu and Puducherry).

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In 2017, five states saw a hike of Rs 1 - Assam, Bihar, Jharkhand, UP and Uttarakhand. There 11 states and UTs which had seen a hike by Rs 8 or more - the maximum being Rs 18.

Hike in MGNREGA wages from 2017 to 2019

Source: Author's calculation based on official notifications at nrega.nic.in

Growing rural distress

While no explanation is available in public domain about such paltry hike, this is a matter of concern because of widespread rural distress.

For one, the growth in rural wages has been in the low single digit since 2015-16, according to the data compiled by the Centre for Monitoring Indian Economy (CMIE).

Secondly, rural distress is reflected in the extraordinary surge in work in 2018-19. The official data reveals that 2018-19 registered 266.4 crore person-days of work - the highest since the National Democratic Alliance (NDA) II came to power in 2014-15.

The work generated has ranged from 166.21 crore person-days in 2014-15 to a maximum of 235.65 crore person-days in 2016-17 until now.

Less than minimum wages

The third reason to worry is the fact that the MGNREGA wages continue to remain below the minimum wages of corresponding states.

A comparative analysis by a group of NGOs under the banner of NREGA Sangharsh Samiti shows that in 33 of 34 states and UTs the wages are below the corresponding minimum wages.

Way back in 1983, the Supreme Court had ordered payment of minimum wages in all such works in the Sanjit Roy vs Rajasthan case.

The court had stated: "The State cannot be permitted to take advantage of the helpless condition of the affected persons and extract labour or service from them on payment of less than the minimum wage. No work of utility and value can be allowed to be constructed on the blood and sweat of persons who are reduced to a state of helplessness on account of drought and scarcity conditions."

The case pertained to the public works department (PWD) engaging people in construction work near Tilonia in Rajasthan as a relief to persons affected by drought and scarcity.

For years, social activists have been fighting to implement the minimum wages for MGNREGA works in vain.


NYAY: Decoding the math behind Rahul Gandhi’s poll vow

While the Congress is yet to reveal its plan, saying that the details would be revealed in its manifesto, the World Inequality Lab, a group of economists based at the Paris School of Economics, has come out with four solutions. 

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A few days ago, Congress president announced that t will bring in the NYAY scheme, under which 5 crore poorest families in India. (Photo: PTI)

HIGHLIGHTS

  • Many have questioned the feasibility of NYAY scheme
  • As part of the scheme, poorest 5 crore families in India would be given Rs 72,000 per year
  • While Congress has not yet announced details of the scheme, a group of economists have come out with four possible solutions

More than 72 hours after Congress president Rahul Gandhi made a poll promise of giving Rs 72,000 a year to 20 per cent of the poor (50 million families) if voted to power, a heated debate continues on how to fund it.

That is because the central government is struggling to bring the fiscal deficit to 3 per cent of GDP by 2020.

Its target of reducing it to 3.3 per cent in 2018-19 and 3.1 per cent in 2019-20 has gone awry with the announcement of income support of Rs 6,000 per year to all small and marginal farmers, for which Rs 20,00 crore has been earmarked for 2018-19 and Rs 75,000 for 2019-20.

The fiscal deficit for 2018-19 stands at 3.4 per cent. If implemented, the NYAY will add further to the fiscal woes, which is what the Finance Minister Arun Jaitley has been trying to impress while commenting on the NYAY.

While the Congress is yet to reveal its plan, saying that the details would be revealed in its manifesto, the World Inequality Lab, a group of economists based at the Paris School of Economics, has come out with four solutions.

Arguing that the income inequality in India has risen to unprecedented levels in the post-liberalised era, it proposed that the rich need to be taxed to fund the NYAY in four ways.

A 2 per cent tax on total wealth on households owning more than Rs 2.5 crore of wealth, which would yield Rs 2.3 lakh crore or 1.1 per cent of GDP. This will affect only the top 0.1 per cent of households and leave out 99.9 per cent households.

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A 2 per cent tax only on land and building above Rs 2 crore, which would yield Rs 2.6 lakh crore or 1.2 per cent of GDP. This would impact only the top 1 per cent of households.

A new tax bracket for the top 0.1 per cent of the population by 20 percentage points, which would generate Rs 1.36 lakh crore or 0.6 per cent of GDP. This implies adding a 50 per cent top marginal income tax bracket, from the current level of 30 per cent, for individuals earning more than 50 lakh.

A new tax bracket of 70 per cent tax rate, which is roughly equal to the top tax rate set in the US as well as in India in the 1970s and which is significantly lower than the historical highs observed in the US or the UK in the 20th Century, generating up to 1.2 per cent of GDP.

Since Congress has already ruled out withdrawing any of the existing social welfare programmes, taxing the rich may be a viable option for it. But will it be able to do that remains a proverbial billion dollar question.

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