The ministry of rural development has decided to challenge a Karnataka high court order that directed the government to pay minimum wages to MG-NREGA workers.
The court order had led to a tussle within the government over whether the order should be challenged or not. While rural development minister Jairam Ramesh, who is monitoring the UPA flagship aam-admi scheme, spoke against challenging the order, finance minister Pranab Mukherjee advised him to challenge it to avoid huge financial implications of over Rs 10,000 crore.
An apparent stand-off and an imminent date to challenge the order in the apex court compelled an intervention by the prime minister, which broke the logjam now.
Filing an SLP against the order, Ramesh had earlier opined, could be seen as the government denying statutory minimum wages to the workers under the UPA’s right to work programme. Ramesh had also written to the PM earlier proposing streamlining NREGA and minimum wages as a way out, in place of an appeal.
But finance ministry officials contended that the order would entail the government paying about Rs 7000 crore in form of arrears and an additional Rs 3000 crore every year from now as per present wage structures. The NREGA budget in 2011-12 is Rs 40,000 crore.
If made to pay minimum wages, the states might arbitrarily hike the minimum wages forcing the Centre to pay more under the scheme, officials fear. As of now, eleven states including Andhra Pradesh, Karnataka, Rajasthan, where NREGA is doing well, are paying wages less than the minimum wage.
The order had re-ignited the debate on what the workers get under the Act—statutory minimum wages or a centrally decided amount.
Section 6(1) of the NREGA allows the Centre to specify wage rates notwithstanding the Minimum Wages Act. Last year, Sonia Gandhi-led National Advisory Council (NAC) batted for minimum wages, but the PMO decided in favour of indexing wages to Consumer Price Index for Agricultural Labour.