States have to bear additional MGNREGA burden: Plan panel

The Planning Commission today said states will have to bear the additional burden of payment towards employment guarantee scheme MGNREGA beyond the amount prescribed by the centre to match their minimum wages.

"Any state whose minimum wages are below that or close to that (prescribed under MGNREGA), then it is not a problem.

"But if you are a very rich state that can afford very high minimum wages, then Central government reimbursement will be limited," Deputy Chairman Planning Commission Montek Singh Ahluwalia told reporters here.

Under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), a worker is entitled to Rs 100 per day for minimum of 100 days in a year. Later, it was decided to link the payment to inflation.

As per the revised structure (post linking it to inflation), the wages under MGNREGA will go up between 17 per cent and 30 per cent on the base of Rs 100 for the present, a move that will benefit 5 crore people.

However, under the Minimum Wages Act, the wages are fixed by the states and these vary from state to state.

Ahluwalia has said if the minimum wage in state is higher than compensation prescribed under the MGNREGA scheme, the state should bear the additional burden.

"The idea (behind the scheme) was that the Centre will reimburse up to Rs 100 per day (plus additional after linking it with inflation)," he said, adding that problem occurs in those states which have higher minimum wages than what has been specified under the Act.

"Over a period of time, many states have revised their minimum wages upward with some having minimum wages above the Centre specified level" he added.

The concern of the Centre government, he said, "is  what happens if in a state, they just raise minimum wages to some unreasonably high level. They don't enforce it on their own work but just enforce it on MGNREGA".