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Plan to link NREGA wages to inflation hits CP Joshi wall

Priyadarshi Siddhanta Posted online: Mon Dec 27 2010, 00:40 hrs
New Delhi : Rural Development Minister CP Joshi has refused to move on a proposal by the Planning Commission to
link wages under the national job guarantee scheme to the consumer price index. In fact, the Plan panel’s proposal
was echoed by the National Advisory Council chaired by UPA Chairperson Sonia Gandhi.In a presentation to Prime
Minister Manmohan Singh recently, the Planning Commission made a strong case for aligning the wage levels to
rising prices as reflected in the CPI. This would have also forced certain states to hike the wages in tandem with the
increasing CPI such that real wages did not erode for such workers. Deputy chairman of Planning Commission
Montek Singh Ahluwalia pitched for this mechanism arguing that it was essential to insulate daily wage-earners from
the inflationary pressures.“To me, there is a need to link NREGA wages with the rise in Consumer Price Index. There
is a growing feeling that the wages need to be inflation-indexed,” he said recently in conversation with select
journalists.The country’s food inflation reached double-digit levels to 12.13 per cent for the week ended December 11
— the highest in six weeks, due to a steady rise in prices of vegetables particularly onions.In its Mid Term Appraisal
of the 11th Five Year Plan, the Plan panel reiterated the government’s commitment provide Rs 100 as daily real wage
to every NREGA worker. This found mention in this year’s Budget and was part of the Congress election manifesto.
But no concrete mechanism has been taken by the Rural Development Ministry on this issue so far. Though
Ahluwalia refused to elaborate, Plan panel member Mihir Shah said, while the ministry was concerned about a
competitive rise in wages under NREGA by different states, the Centre was bound to fulfill its commitment of providing
a real wage of Rs 100. “Indexing wages to inflation is the least we can do to relieve the distress of the poorest people
of our country at a time of soaring food prices. If the problem is of finding a suitable index, then we can either use the
CPI for agricultural labourers as suggested in the MTA of the 11th Plan or we can use the revised index based on
2004-05 prices,” he told The Indian Express. Shah said that if the Centre could give dearness allowance to its
employees to offset the rise in prices, why shouldn’t the same mechanism be applicable to NREGA wage-
earners.“The Schedule of Rates (SoRs) also need to be indexed to the wage level, so that each rise in inflation-
indexed wages is accompanied by an automatic adjustment in the SoRs,” the Plan panel said in the MTA. The
Planning Commission has been waiting for the ministry’s response on the issue before in house deliberations can be
initiated. There was a growing feeling among a section of the Congress leadership that electoral gains accrued to the
party in the last general polls should now be consolidated. Dithering further on the matter would imply giving ready
ammunition to the opposition, some in the Plan panel fear. According to the Commission, so far, 3.26 crore
households have secured employment under the scheme.

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