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States must pay minimum wages to workers under NREGA: Pronab Sen

Sreelatha Menon  |  New Delhi 

Principal Advisor to Planning Commission Pronab Sen, who is heading a committee on wages, has said states are bound to pay prevailing minimum wages to workers under the National Rural Employment Guarantee Act.

His view contradicts the stand taken by the rural development ministry, which had said that NREGA exempts itself from other laws including the Minimum Wages Act and hence the Centre is not obliged to reimburse states according to their minimum wages.

The Andhra Pradesh government had even taken the ministry to court over this. The labour ministry had also maintained that minimum wages have to be paid to workers under NREGA. The confusion has been confounded with National Advisory Council chairperson Sonia Gandhi writing to Prime Minister Manmohan Singh that NAC had recommended paying of the minimum wages.

Sen said there was no reason for any confusion for either state or the Centre. The states are bound to pay minimum wages, whether the Centre reimburses it or not, he said. The states implement the Act and it is certainly mandatory for the states to pay nothing less than the minimum wages under NREGA, he said.

“Who implements NREGA? It is the state. So it is the state’s job to pay state rates. All that the Centre needs to do is to tell the state to follow their minimum wages. The Centre will give only its rates, which were determined to be Rs 100.”

He compared this with the public distribution system where Andhra Pradesh introduced the Rs 2 per kilo rice scheme for the first time in the country. The Centre merely said that it would pay the state only the national subsidy rates for PDS while the additional will have to be borne by the state. The situation is similar in NREGA also, said Sen.

He also said that NREGA is an income support measure rather than an employment scheme and therefore calls for very much the same formula.

Sen is heading a committee formed by Ministry of Rural Development and Ministry of Statistics and Programme Implementation to link NREGA wages with real wages. He said he can wrap up the report the moment the Centre decides whether these real wages are to be in terms of state or Central rates.

The principal advisor does not think much of the move to have a national statutory minimum wage. The Labour Ministry has initiated steps to amend the Minimum Wages Act to make the national floor level minimum wages statutory — where states can pay more than the amount, but not less than that once the law comes into force. “This is an old debate and states have always opposed this and with good reason.”

He said imposing a national minimum wage as statutory is like having the minimum support price for paddy, wheat and pulses. A whole range of activities in many states would become unviable once such rates are dictated from above.

The government procures just 15 per cent of foodgrain, but it forms a benchmark for the remaining 85 per cent. This improves the bargaining power of rural farmers.

In NREGA, controlling of a wage rate from above has had this effect with good results for labourers and not so good for many activities which have been affected, he said.

NREGA may not be doing well in a state like Bihar but labourers migrating to Punjab now bargain using those wage rates.

First Published: Tue, December 07 2010. 00:34 IST