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Posted: T hu, Jan 6 2011. 9:17 PM IST

The Mint Report for 06

January 2011
Government increases wages under MGNREGA;
food inflation hits a one-year high; markets
fall for a third day in a row

New Delhi: The rural development ministry on Thursday dec ided to increase
payments under MGNREGA, starting immediately. From now on, wages will be
linked to the consumer price index for agricultural labour in each state. All in all,
they’ll go up by 17-30% across the country. What’s more, the wage hikes will
be effective starting from 01 January 2011.

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Congress president Sonia Gandhi had written to the Prime Minister in November
asking for MGNREGA payments to be increased to minimum wage levels. But the
rural development ministry opposed the move, arguing that states would simply
increase their minimum wages for farmers, forcing the centre to foot the bill.

MGNREGA is the UPA government’s most popular soc ial scheme. Its minimum
wage until now was Rs100 a day. The scheme guarantees 100 days of work
each year for eac h rural household.

And the announcement of the wage hike came even as new food inflation
figures showed a fifth straight week of acceleration. The food price index shot
up 18.32% percent in the period to 25 Dec ember. In the previous week it stood
at just 14.44%. Unexpected rains have spoiled some c rops, sending prices of
staples like onions skyrocketing. The high food inflation figures increase
c hances the RBI will hike rates in its next review, sc heduled took plac e on 25
January

And here’s how Indian markets on Thursday. The Sensex plunged 116 points to
c lose at 20,185. And the Nifty lost 32 to wind up at 6,048.

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