NREGS cost rises steeply

The government's bill for funding the National Rural Employment Guarantee Scheme (NREGS) has risen steeply, due to its decision to revise wage rates under these projects and to link these to the inflation rate.

The government had agreed to indexation, but not to activists' demand to pay at each state's set minimum wage rates, indexed to inflation.

The wage rates continue to be delinked from the statutory minimums applicable; in many states, these are more than the NREGS levels.

Even so, after the wage revision, a majority of states are paying much more than their respective minimum wages. And, the payment of inflation-indexed rates has meant an additional expense of Rs 6,229.7 crore (Rs 62.29 billion) as payment for 2,835 million mandays in 2009-10.

However, say activists, if it had taken state minimum wages and indexed these to inflation, it would have to pay roughly the same amount. For, some states' minimums are less than the NREGS rates.

For instance, in Jharkhand, Bihar and West Bengal, the minimum wage is far less than the NREGS one.

These are calculations by the Mazdoor Kisan Sangharsh Samiti, which has been demanding inflation-indexed payment of minimum wages in the scheme. The Samiti says this is legally needed, not a matter of choice.

Last week, the government faced criticism from various legal luminaries, including former Supreme Court Chief Justice Varma for not abiding by the Minimum Wages Act. He said the apex court should take cognisance on its own of the illegality.