India’s rural jobs programme is reportedly offering its lowest wage hike ever next year

• Despite a record outlay for the MGNREGA in 2019-2020, daily workers enrolled in the scheme will reportedly receive the lowest wage hike since its inception in 2006.
  
• On average, unskilled manual workers will see their wages rise by a little over 2% as per a state-wise notification from the Ministry of Rural Development.
  
• The wage hike has been progressively declining in the last few years. From a 5.7% hike in 2015-16, it fell to 2.9% in 2016-17 and 2.7% in 2017-18.

Despite a record outlay for the Indian government’s National Rural Employment Guarantee scheme in 2019-2020, daily workers enrolled in the scheme will reportedly receive the lowest wage hike since its inception in 2006.

On average, unskilled manual workers will see their wages rise by a little over 2% as per a state-wise notification from the Ministry of Rural Development, reported the Indian Express.

In fact, workers in at least three states - Karnataka, Kerala and West Bengal - will see no change in their daily wage rates.

The wage hike has been progressively declining in the last few years. From a 5.7% hike in 2015-16, it fell to 2.9% in 2016-17 and 2.7% in 2017-18.

This comes as the number of workers in the scheme has been increasing. The scheme recorded 2.6 billion work days last year compared to 2.3 billion in 2016-17. Hence, even with a rise in budgetary allocations, there’s a larger base of workers to cater to.

There might be another reason for the decline in wage growth -- rural distress. The wages paid under the scheme are tied to the consumer price index (CPI) for agriculture workers.

In determining the wage rates for the new fiscal year, the Ministry of Rural Development reportedly compares the CPI rates for agriculture workers for December 2018 and December 2017.


Consumer inflation has been on a downward slope as of late, hitting an 18-month low in December 2018, owing to a weakness in the prices of food items amid an excess in agricultural production.


Moreover, while linking wages to rural inflation seems a justifiable practice, it will only perpetuate the current trend of low prices as low wages means lower aggregate demand in rural areas.



SEE ALSO:

The Modi government is looking to boost rural consumption with record outlay for employment scheme