Parliamentary Panel on NREGA Wage Rates

The Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) has been a mainstay of rural employment in India since its inception. Recently, the Parliamentary Standing Committee on Rural Development and Panchayati Raj brought into light critical issues regarding NREGA wage rates. The report, released on April 3, 2025, emphasises that current wages do not keep pace with inflation. This has rendered them below subsistence levels, undermining the scheme’s aim to provide economic security for the most vulnerable rural populations.

What is NREGA?

NREGA is the largest employment guarantee programme globally, offering up to 100 days of work annually to rural households. With over 25 crore registered workers, it plays a vital role in rural livelihoods. The Ministry of Rural Development (MoRD) sets state-wise wage rates, which vary across states.

Current Wage Rates

For the financial year 2025-26, daily wages range from Rs 241 in Nagaland to Rs 400 in Haryana. The national average wage is Rs 294, reflecting only a 5% increase from the previous year. This increase falls short of addressing the rising cost of living and inflation.

Wage Calculation Methods

NREGA wage rates are determined by two methods outlined in Section 6 of the Act. The Centre can notify a wage rate above Rs 60, while the state’s minimum agricultural wage applies until a central rate is set. Historical capping of wages at Rs 100 has led to workers in some states receiving less than the minimum wage, violating the Minimum Wages Act.

Impact of Committees

Numerous committees have made recommendations to improve NREGA wages. The Mahendra Dev Committee suggested wages equal to state minimums and indexing to CPI-R. However, the Ministry of Finance rejected these proposals, citing fiscal concerns. The Nagesh Singh Committee and Anoop Satpathy Committee also made recommendations that have largely been ignored.

Key Issues Identified

The gap between NREGA wages and state minimum wages has widened, with discrepancies reaching Rs 241 in some states. The Standing Committee has described this as a violation of the Constitution’s Article 39, which mandates equal pay. The disparity in wage rates across states is also alarming, with some states offering lower wages than others.

Indexation Concerns

Current indexation to the Consumer Price Index for Agricultural Labourers (CPI-AL) is inadequate. CPI-R is deemed more representative of rural labour households. The continued use of 2009 as the base year for indexation is outdated, especially when wage caps have historically limited real wage growth.

Historical Context and Vision

NREGA was introduced to provide dignified employment and livelihood security in a time of low rural wages and poor bargaining power. While it has improved rural wages overall, the current wage structure undermines its foundational vision. The Supreme Court has ruled that paying less than the minimum wage constitutes forced labour, reinforcing the need for fair compensation.

Recommendations for Improvement

The Standing Committee has called for a minimum wage of Rs 400 per day to meet basic living costs. Until wages are fair, NREGA’s promise of dignified work remains unfulfilled.

Questions for UPSC:

1. Examine the impact of the Mahatma Gandhi National Rural Employment Guarantee Act on rural employment in India.
2. Discuss the significance of wage indexation in employment guarantee schemes and its implications for workers.
3. What are the constitutional provisions regarding minimum wages? Critically discuss their relevance in the context of NREGA.
4. Analyse the role of government committees in shaping employment policies in India and their effectiveness in addressing wage disparities.

Answer Hints:

1. Examine the impact of the Mahatma Gandhi National Rural Employment Guarantee Act on rural employment in India.

1. NREGA provides up to 100 days of guaranteed employment annually, reducing rural unemployment.
2. It has empowered over 25 crore registered workers, enhancing their bargaining power and livelihood security.
3. The scheme has contributed to increased rural wages, helping to lift many out of poverty.
4. During crises, such as the COVID-19 pandemic, NREGA has served as important safety net for rural households.
5. However, current wage rates are inadequate, failing to meet subsistence levels and undermining the program’s objectives.

2. Discuss the significance of wage indexation in employment guarantee schemes and its implications for workers.

1. Wage indexation ties wages to inflation, ensuring that workers’ earnings maintain their purchasing power over time.
2. It is essential for protecting low-income workers from rising living costs, particularly in rural areas.
3. Current indexation methods (CPI-AL) are criticized for being outdated and not reflective of broader rural economic conditions.
4. Effective indexation could help mitigate the wage disparity between NREGA and state minimum wages.
5. Improved indexation practices are crucial for fulfilling the program’s promise of dignified work and economic security.

3. What are the constitutional provisions regarding minimum wages? Critically discuss their relevance in the context of NREGA.

1. Article 39 of the Constitution mandates the state to secure equal pay for equal work, emphasizing fair compensation.
2. The Minimum Wages Act, 1948 requires that workers be paid at least the minimum wage set by the government.
3. NREGA wage rates often fall below the minimum wage, violating constitutional provisions and undermining worker rights.
4. The Supreme Court has ruled that paying less than the minimum wage is a form of forced labor, reinforcing the need for compliance.
5. Addressing wage disparities in NREGA is essential to uphold constitutional mandates and protect vulnerable workers.

4. Analyse the role of government committees in shaping employment policies in India and their effectiveness in addressing wage disparities.

1. Government committees, like the Mahendra Dev and Nagesh Singh Committees, have provided recommendations to improve wage rates.
2. Despite expert recommendations, the government has often ignored proposals, limiting their effectiveness.
3. Committees have brought into light the need for wage indexation and alignment with minimum wages, yet implementation remains lacking.
4. Some committees included only government representatives, which may limit diverse perspectives on wage issues.
5. To effectively address wage disparities, future committees must ensure inclusive representation and actionable recommendations.