SSRN Id3784102

Strengthening wage policies to protect incomes of the informal
and migrant workers in India
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Anoop Satpathy, Xavier Estupiñan and Bikash Kumar Malick1
Abstract
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The Government of India is leveraging wage policy as a part of overall fiscal policy actions to
protect the income of the informal and migrant workers affected by the Covid-19 pandemic
and resultant lockdown measures. The statutory minimum wages through its redistributive
mechanism and MGNREGS wages as an effective fiscal stimulus, could help alleviate the
hardship faced by the informal workers and returnee migrants. However, for wage policies to
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act as an effective antidote, wage levels and their adequacy along with full implementation are
of paramount importance. In this context, the paper argues that the level of both statutory
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minimum wages and MGNREGS wages are very low in India, and several implementation
bottlenecks inhibit them from delivering results. It limits the very effectiveness of wage
policies, unless prompt actions are taken to strengthen and revamp these policy tools. Under
this backdrop, this paper provides an alternative framework for setting and revising minimum
wages and MGNREGS wages at an adequate level. This is expected to significantly strengthen
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the current wage policies in addressing their stated objectives of reducing poverty and
inequality while supporting a human-centred economic recovery process.
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Key Words: India, Covid-19, wage policy, minimum wage, floor wage, MGNREGS wage,
poverty, inequality, informal worker and migrant worker
1. Introduction
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The Covid-19 pandemic through border control, mobility restriction and lockdown, has had a
detrimental effect on the economies around the world. It has also profoundly impacted
employment and incomes of workers. Based on a scenario analysis, the International Labour
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Organisation (ILO) has estimated globally 495 million and 345 million full-time job losses
during the second and third quarter of 2020 respectively (ILO, 2020a). It further states that the
lower-middle-income countries are the hardest hit due to workplace closure having experienced
an estimated decline in 240 million full-time jobs in the second quarter of 2020. The reduction
in working hours has caused losses in labour income by 10.7 per cent globally during the first
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three quarters of 2020 which is equivalent to USD 3.5 trillion (or 5.5% of global GDP)
compared to the same period of 2019. Even under the assumption of a faster recovery, it has
projected that the global job losses are unlikely to return to the pre-crisis level by the end of
2020 (ILO, 2020b). The informal and migrant workers, who are a disadvantaged group in the
labour market, are severely hit by the crisis. As per the ILO estimate, of the 2 billion informal
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economy workers worldwide, almost 1.6 billion are significantly impacted by lockdown
1
Dr. Anoop Satpathy is working as a Fellow at the V.V. Giri National Labour Institute, Noida (Email:
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anoopsatpathy.vvgnli@gov.in). Mr. Xavier Estupiñan, Wage Specialist with International Labour Organization
DWT/Country Office, New Delhi (Email: estupinan@ilo.org). Mr. Bikash Kumar Malick is an officer of Indian
Economic Service of 2015 batch (Email: malickbikashkumar@gmail.com). The views expressed in this paper are
those of the authors and do not reflect the opinion or views of the organizations they are affiliated with.
This preprint research paper has not been peer reviewed. Electronic copy available at: https://ssrn.com/abstract=3784102
measures and working in the hardest-hit sectors having no possibility of working remotely
(ILO, 2020c). The crisis is estimated to result in a decline in earnings of 60 per cent of informal
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workers globally as per the ILO. The World Bank projection suggests that the crisis will push
88 to 115 million people into extreme poverty in 2020, with the total rising to 150 million in
2021, thereby increasing the global extreme poverty rate for the first time since 1990 (World
Bank, 2020).
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Like other countries, the pandemic has also severely impacted the Indian economy and cast
devastating effects on its economy and labour market. India had implemented one of the
strictest lockdowns compared to any other countries in the world. For 2020, the IMF estimates
Gross Domestic Product (GDP) growth of just 1.9 per cent for the country, the lowest rate since
the 1991 balance-of-payments crisis (Walter, 2020). In line with the IMF’s forecast, the first
quarter (April – June) of 2020-21 estimate released by the Government shows a sharp decline
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in GDP by 23.9 per cent as against a 5.2 per cent increase in GDP in the corresponding quarter
of 2019-20 (GOI, 2020b). This is the worst contraction of GDP in the history of the Indian
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economy due to the combined impact of supply disruption and demand compression. As per
the released data, all the critical sectors of the economy except agriculture and allied activities
witnessed contraction, with construction witnessing a drop by a whopping 50.3 per cent while
the trade, hotels, transport and communication by 47 per cent and manufacturing industry saw
a 39.3 per cent decline. In the second quarter (July-September) of 2020-21, the GDP
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contractions continued, but the extent of contractions narrowed down to 7.5 per cent from 23.9
per cent in the first quarter (GOI, 2020c)
In the context of the labour market, a rapid assessment undertaken by the ILO suggests that the
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number of workers vulnerable to the lockdown could reach 364 million to 429 million in India,
including those in casual work, self-employment and unprotected regular jobs without access
to social protection coverage (ILO, 2020d). Similarly, a study by Estupiñan and Sharma (2020)
estimated that lockdowns 1.0 and 2.0 2 had put 104 million and 69.4 million informally
employed workers at risk of job loss, respectively. The study also shows that formal workers’
wages have been cut by 3.6 per cent, while the informal workers experienced a much sharper
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cut in wages to the tune of 22.6 per cent. As a result, workers those who are informally
employed in the unorganised sector suffered a wage loss amounting to ₹ 635.53 billion, which
is almost close to annual union budget allotted to Mahatma Gandhi National Rural Employment
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Guarantee Scheme (MGNREGS) in 2020-2021. The lockdown, which was announced on

March 24, 2020, has also severely impacted the migrant workers in urban areas in general and
the short-term circular migrant workers in particular (Srivastava, 2020). Conservative estimates
show that at least 5 million or more migrants who lost jobs and accommodation in cities during
the pandemic, returned to their villages (ILO, 2020d). However, other estimates show that more
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than 111 million long-term and short-term circular migrants constituting 57 per cent of the total
urban workforce in 2017/18 are vulnerable and impacted severely by the lockdown in terms of
job and income loss forcing them to return to their villages (Srivastava, 2020). As the pandemic
has disproportionately impacted the most vulnerable and hard to reach group within the labour
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market, the IMF has estimated that 41 million Indians would slip into extreme poverty
(surviving on $1.9 a day) and pandemic would “exacerbate pre-existing trends" in the context
of income inequality (IMF, 2020).
Immediately after the Covid-19 pandemic, governments worldwide took unprecedented actions
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to save lives and protect livelihoods. As an immediate measure in India, the Government
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Lockdown 1.0 (24 March to 14 April 2020) and lockdown 2.0 (15 April to 3 May 2020) as per the government
notification.
announced a series of interventions to protect the workers' wages and income. On March 23
2020, the Ministry of Labour and Employment, Government of India (GOI) issued an advisory
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to the employers of public and private establishments to extend their coordination by not
terminating their employees (particularly casual and contractual workers) or reduce their
wages. It advised to provide paid leaves if necessary and consider employees on duty during
the lockdown period3. On March 24, 2020, GOI directed all the state governments to release
ex-gratia payments to 3.5 crores registered construction workers using the accumulated ₹
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52,000 crores cess fund in their respective Building and Other Construction Workers’ Welfare
Boards4. On March 26, 2020, the government amended the Employees’ Provident Funds &
Miscellaneous Provisions Act to allow 4.8 crores formal sector registered workers to withdraw
up to 75 per cent of their balance in the fund or three months’ wages, whichever is lower, as an
emergency measure to tide over any difficulties arising during the pandemic. Apart from the
above measures, on March 26 2020, the government also announced a stimulus package of ₹
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1.7 trillion (around 0.8 per cent of GDP) under Pradhan Mantri Garib Kalyan Yojana
(PMGKY) to benefit farmers, women, low-income households and migrants in terms of cash
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transfers and in-kind support (such as provision of food grains and cooking gas) 5 . It also
undertook a host of other initiatives such as mapping migrant workers and launching of
workers' helpline to extend support to them (ILO, 2020e). In addition to the Central
Government response, the State Governments also undertook various measures in varying
degrees to benefit migrants and informal workers6.
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As the crisis prolonged, the Government announced an Atmanirbhar Bharat Abhiyan (ABA)
or Self-Reliant India Mission package on May 17, 2020, involving 10 per cent of the GDP or
equal to ₹ 20.97 lakh crores7 to stimulate the economy out of an impending recession and to
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boost job creation 8 . The package involved various macroeconomic stabilization measures
including expansionary fiscal policy, accommodative monetary policy, financial support to
MSMEs and infrastructure enhancement fund to agricultural and allied sectors. The dominant
view around the world including in India was that the lockdown impact resulting in working
hour losses would lead to a more than proportional demand shock in terms of labour income
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losses and reduction in spending larger than those emanating from supply disruptions, hence
the requirement of a larger fiscal stimulus. However, the ABA package announced by India
was criticised as it is designed more to enhance productive supply-side capacity than to support
demand (ILO, 2020d and Pangariya, 2020).
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Under the ABA fiscal stimulus sub-component, the Government has leveraged the existing
MGNREGS by allocating an additional amount of ₹40,000 crores for 2020-21, taking the full-
year allocation for the scheme to over ₹100,000 crores for the first time9. It also introduced a
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3
Detail advisory may be seen at: https://labour.gov.in/sites/default/files/Central_Government_Update.pdf
4
In response to this direction, state government depending on the availability cess funds released varied amount
to the migrant workers ranging from ₹ 1000-1500 (16 states); ₹ 2000-3000 (8 states); and ₹ 4500 and above (5
states) as provided in Srivastava (2020).
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5
However, the package was criticized as it was poorly targeted at the urban informal workers and especially the
labour migrants, leading many experts to recommend a universal food and income transfer to stem the hunger
and extreme economic hardship (Srivastava, 2020).
6
For details see Srivastava (2020) and ILO (2020e)
7
On 12 November 2020, the Government announced Atmanirbhar Bharat 3.0, wherein the cumulative stimulus
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amount was enhanced to ₹ 29.87 lakh crores which is equivalent to 15 per cent of the GDP.
8
For details provisions under ABA please see https://pib.gov.in/PressReleasePage.aspx?PRID=1624661
9
However, the Government didn’t accede to a large number of requests to expand the scope of the Mahatma
Gandhi National Rural Employment Guarantee Act (MGNREGA) to provide 200 days of job in rural areas and
extending the scheme to urban areas.
new Garib Kalyan Rojgar Abhiyaan (GKRA) on June 20, 2020, to boost employment and
livelihood opportunities for migrant workers returning to villages and similarly affected rural
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citizens due to lockdown measures10. The GKRA entailed ₹ 50,000 crores11 worth project for
building durable rural infrastructure to be implemented in a mission mode campaign in 125
days in 116 districts of six states12. The GKRA is a convergent effort between 12 different
Ministries/Departments to expedite 25 public infrastructure works and works relating to
augmentation of livelihood opportunities for more than six million migrants. However, it is
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stated that GKRA itself offers little new money and pools already allocated funds.
Mindful of the fact that wages in the public work programme are the main element which will
provide protection to the workers and help in boosting private consumption demand and in turn
investment, the Government under the ABA measures also announced an increase in average
MGNREGS wages by ₹15 per day (from ₹187 per day in 2019-20 to ₹202 per day in 2020-
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21)13. This can benefit five crores families and results in an additional income transfer of ₹2,000
per household14. Besides this, the Government also announced extending legal coverage of
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minimum wages to all wage earners; established a statutory national floor wage to protect the
low paid workers and simplified minimum wage structure in the country (ILO, 2020e). The
last set of announcements were part of the ongoing wage policy reform under the enacted Code
on Wages, 2019 (hereafter referred to as wage code), which the government-linked with the
ABA measures. To activate the provisions of the wage code at the earliest, the Government
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also notified the implementation mechanism in the form of Draft Wage Code (Central) Rules,
2020 (hereafter referred to as wage rules) on July 7, 2020. This wage rule (GOI, 2020c), apart
from others, provides the mechanism for fixation, revision and frequency of adjustments of
minimum wages and floor wages and hence, shall decide the level at which these rates will be
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initially set and the extent to which minimum wage levels are maintained to protect the erosion
in the purchasing power of workers.
While the above steps in the sphere of wage policies are noteworthy, the extent to which these
interventions will help protect and restore the informal and migrant workers' income is
questioned. It has been established that the level of minimum wages are very low in India
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(Belser and Rani, 2011) and display wide inter-state divergence and disparities with poor
compliance (ILO, 2018 and GOI, 2019b). Some states even set the minimum wages below the
national floor-level minimum wage rate 15 of ₹ 176 per day as of 2018-19 (GOI, 2019b).
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Similarly, the MGNREGS wages which are supposed to provide livelihood security to the poor
and deprived households during distress are historically low compared to state agricultural
10
The details of the ABA may be seen at: https://pib.gov.in/PressReleasePage.aspx?PRID=1632861 and
https://www.businesstoday.in/current/corporate/govt-announces-atmanirbhar-bharat-30-covid-stimulus-
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worth-rs-29-lakh-crore/story/421809.html
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On 12 November 2020, the Government further enhanced GKRA outlay by ₹ 10,000 crores in the current
financial year. It further stated that ₹ 37.5 thousand crores have been spent till date from the earlier allocated
amount of ₹ 50,000 crores, which is over and above the allocation for MGNREGS.
12
The six states and number of districts in them are as follows: Bihar (32 districts), Uttar Pradesh (31), Madhya
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Pradesh (24), Rajasthan (22), Odisha (4) and Jharkhand (3). The 116 districts in 6 states have been chosen as
each of these districts have received at least 25,000 return migrants each.
13
However, it is argued that this wage hike is not a new element as the government usually notifies revised
MGNREGA wages with effect from 1st April of every financial year after undertaking price adjustment with
respect to changes in the cost of living.
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14
This is based on the assumption of guaranteed delivery of 100 days of work to each household. In reality,
MGNREGA has generated on an average 45-50 days of work per household in last few years. Hence, the amount
of additional income transfer per household would be less than what is mentioned by the Government.
15
Since, its establishment in 1996, the national floor level minimum wage have been benchmarked to the rural
poverty line.
minimum wages and shows wide divergence over the years. The situation is further
complicated because of poor compliance to the statutory minimum wages (GOI, 2019b) and
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the inability of the states to provide 100 days of guaranteed job under MGNREGS including
delay in wage payments and rejection of wage payments16. Suppose the statutory minimum
wages and MGNREGS wages do not meet workers and their families' basic needs; in that case,
these wages will have a negligible impact on the standard of living of the informal economy
and migrant workers devastated by the pandemic, despite the recent measures announced by
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the Government. As wage levels through its redistributive channels are essential not only for
providing immediate income transfer to the vulnerable informal workers and the return
migrants but also for restoring aggregate demand, therefore it is of utmost importance to set
the level of wages at an adequate level17, and maintain the adequacy of the levels over time
through regular adjustments and ensure full compliance.
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Given this background, this paper critically examines aspects of India's wage policy with
particular reference to the procedure of setting, revision and adjustment of statutory minimum
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wages and MGNREGS wages. Based on the examination, the paper argues that the procedure
of wage fixation and adjustments in India is based on an old framework that results in the
prevalence of low-level minimum wages and MGNREGS wages, thereby severely limiting the
effectiveness of wage and income transfer policies in the country. The paper then presents a
case for strengthening India's wage policies by providing an alternative framework for setting
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both statutory minimum wages and MGRNEGS wages at an adequate level using an evidence-
based methodology and effective social dialogue process. In the end, the paper argues that the
alternative framework of wage fixation will not only make the redistributive effect of wage
policy much stronger in terms providing livelihood security to the low paid informal and
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migrant workers but also in addressing poverty and inequality. This alternative and
strengthened wage policy can act as an essential component of the fiscal policy tool under the
ABA stimulus package to boost private consumption and restore aggregate demand, investment
and promoting economic growth back to the pre-crisis levels.
2. Minimum wage fixation process and adequacy of minimum wage levels

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Minimum wage is the lowest amount of payment which the employer is obliged to pay to the
wage earners for the work performed during a given period. The ILO Centenary Declaration
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for the future of work calls for strengthening labour institutions to ensure workers' adequate
protection, including an adequate minimum wage (ILO, 2019). In India, Article 43 of the
Constitution provides that the State shall endeavour to secure among other things, work, a
living wage and conditions of work ensuring a decent standard of life and full enjoyment of
leisure and social and cultural opportunities. Under this backdrop, India's minimum wage
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system is governed by the Minimum Wages Act (MWA), 1948. The primary objective of the
MWA is to protect workers against unduly low pay, especially those in the unorganised sector,
which account for 87 per cent of the total employment in India.
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16
A study by LibTech (2020) shows that funds tends to dry up around the end of the financial year, holding up
wage payments for weeks or even months at a time. Roughly one in twenty wage payment transactions get
rejected due to technical error such as incorrect account number or incorrect linking of Aadhaar with bank
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accounts. The same study (forward of which is written by noted economist Jean Dreze) mentions that nearly ₹
5,000 crores of NREGA wage payments were rejected during the last five years.
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The concept of ‘adequate’ minimum wages, statutory or negotiated was propounded by the ILO centenary
declaration on the future of work (ILO, 2019). As per the conceptual framework, the level of adequate minimum
wages shall lie above the minimum rate of wages but the below the level of living wages.
Despite its existence for more than 72 years, the effectiveness of the MWA has been a matter
of intense debate. Firstly, the MWA is not universal in its coverage as it is applicable only to
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66 per cent of the wage earners who were part of the scheduled employments18 (ILO, 2018).
Secondly, the minimum rate of wages set under the Act was widely believed to be low. As
shown in Figure 1, some states even set the minimum wages below the ₹ 176 per day national
floor-level minimum wage rates (GOI, 2019b). Therefore, it is not surprising to note that the
level of gross monthly minimum wages in India is third-lowest among the 30 Asia and Pacific
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countries both in PPP and dollar terms in 2019 for which data are available (ILO, 2020f).
Thirdly, there are wide inter-state variations in the level of the lowest and highest minimum
rate of wages much beyond the differences in cost of living and there exist systematic
persistence bias in fixation of the minimum rate of wages for men and women undertaking
similar works (ILO, 2018 and GOI, 2019b). Fourthly, compliance under the MWA is poor for
various reasons as a result of which actual wages received by 20 per cent of regular workers
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and 42 per cent of casual workers were less than even the national floor-level minimum wages
in 2011/12 (GOI, 2019b). Therefore, various impact studies show that the effect of minimum
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wage did not necessarily benefit those at the bottom of the wage distribution (Rani and Ranjbar,
2018 and Wolfson, 2019). The lack of effectiveness of the MWA was empirically assessed
both in the Economic Survey (GOI, 2019b) and in the India Wage Report (ILO, 2018). These
reports have attributed incomplete coverage, lack of application of uniform minimum wage
fixation criteria by states, a complex system with 1,915 scheduled minimum wage rates, low
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awareness among workers and employers, and difficulty in enforcement in the informal sector
as the primary reasons for poor compliance and ineffectiveness of wage policies in India.
Figure 1: Unskilled Minimum Wages in India across States (₹ per day), 2018-19
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538
600
451
500
411
401
376
340
400
327
325
312
311
304
300
295
294
294
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287
280
270
261
255
240
239
235
235
300
225
225
213
206
202
200
196
171
170
166
132
200
115
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100
-
Kerala
Manipur
Mizoram
Karnataka
Tamil Nadu
Maharashtra
D&N Haveli
Daman & Diu
Gujarat
Chandigarh
Tripura
Puducherry
Madhya Pradesh
Goa
Delhi
Nagaland
Meghalaya
Jammu & Kashmir
Andhra Pradesh
Haryana
Himachal Pradesh
Chhattisgarh
Sikkim
Assam
Odisha
Telangana
Lakshadweep
Bihar
Jharkhand
Uttarakhand
Andaman & Nicobar

West Bengal
Rajasthan
Uttar Pradesh
Punjab
Arunachal Pradesh
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Minimum Wage NFLMW
Source: Economic Survey, 2018-19

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Scheduled employments are those employments where more than 1000 workers are engaged and it is
specified in the schedules of the MWA, 1948 either by the Central or State Governments.
Given the minimum wage policy's sub-optimal outcomes, there was a long demand to reform
and move towards a universal minimum wage system19. This sentiment was earlier echoed in
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the Second National Commission on Labour (SNCL) report, which had recommended to
simplify and rationalise the labour laws and procedures (GOI, 2002). The latest two reports,
i.e., India Wage Report (ILO, 2018) and Economic Survey, 2018-19 (GOI, 2019b), also called
for strengthening the minimum wage system to protect workers and address poverty and
inequality. All these developments over the years led to the enactment of the Code on Wages
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in August 8, 2019 by subsuming four wage-related legislation (i.e., the Minimum Wages Act,
1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal
Remuneration Act, 1976).
The wage code has introduced significant reforms, which can benefit wage earners in several
ways (GOI, 2019c). The applicability of the wage code has been made universal irrespective
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of occupation, sector and geography in India. This means that all the wage earners in an
employment relationship will be entitled to a legal minimum wage and timely payment of
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wages within the fixed-wage period. Further, the wage code has introduced a new concept of
statutory floor wage to be set by the Central Government based on a minimum standard of
living. It prohibits the state governments to fix their respective minimum wage rates below the
floor. This has been done to ensure that employees’ wages do not fall below the minimum
standards of living anywhere in the country and address the inter-state disparities in the
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minimum wage rate. Unlike in the earlier, MWA (1948), the wage rules have included the
criteria for fixation of the minimum wage rate and the possibility of adjusting minimum wages
every six months with respect to changes in the cost of living through dearness allowance (GOI,
2020). This is expected to bring uniformity in the minimum wage fixation criteria across states
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and their regular adjustments. Lastly, the wage code has also simplified the minimum wage
structure of India. Therefore, instead of existing 1,915 different occupational wage rates, each
state will have a minimum of 3 and a maximum of 12 wage rates depending on the skills or
geographical region or both (Satpathy et al. 2020). The simplification of the complex system
is expected to improve the degree of compliance.
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The universalisation of minimum wage and establishment of statutory floor wage is expected
to raise the wage levels of millions of low-paid workers, either presently not covered under the
minimum wage regulation or receiving a sub-minimum level of wages. Studies show that if
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fully implemented, the positive social outcomes may reduce inequality and poverty, including
a sharp reduction in the gender pay gap at a low fiscal cost in India (Belser and Rani, 2011).
However, the extent of the effect of these redistributive outcomes will be contingent on the
level at which floor and minimum wages are set and on the degree of compliance (Estupinan
et al., 2020 and ILO, 2020f). Therefore, this paper also critically examines both floor and
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minimum wage fixation criteria and their adjustment process as introduced in the wage rules.
The elements taken into account in the criteria and their adjustment process are crucial in
determining the adequacy of the level at which these two wage rates are set and maintained
over time.
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As stated earlier, to give effect to the wage code at the earliest to benefit the wage earners and
migrants during the pandemic, the Government has notified the draft wage rule soliciting
comments. The wage rules provide implementation mechanisms for various wage code
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19
The 44th session of ILC (2012) recommended that ‘the MWA, 1948 should cover all employments and the
existing restriction on its applicability only to the scheduled employments should be done away with’. See
recommendations of the Conference Committee on “Minimum Wages” (Annexure 1, page 14) at:
https://labour.gov.in/sites/default/files/44th_ILCL.pdf accessed on July 3, 2020.
provisions, including fixation, revision and adjustment of the floor and minimum wages. A
scrutiny of the wage rules suggests that the criteria and method of fixation, revision and
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adjustment of floor wages and minimum wages continues to be based on old framework. At
least from a need-based approach, the rules' criteria may not capture the realities of current
household consumption expenditure patterns. If the floor and minimum wages are fixed as per
the criteria given in the wage rules; their levels may not be adequate to help the wage earners
meet their needs and that of their families and tide over the ongoing crisis. Therefore, fixing
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statutory wage levels at an adequate level is of utmost importance. In the following sections;
we have discussed the issues with wage fixation criteria and adjustment process as provided in
the draft rule.
As far as floor wage fixation is concerned, the wage code states that floor wage shall be
determined as a worker's minimum living standard. However, the criteria to determine what
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constitutes minimum living standards are not laid out in the wage rules. It simply states that
elements such as food, clothing, housing, and other factors considered appropriate by the
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central government shall be taken into account. This raises questions about the level at which
the floor wage will be initially fixed and if the levels will factor in the diverse realities across
states in India. As far as the periodicity of revision and updating of floor wage is concerned,
the rule states that the floor wage ‘may’ be revised ordinarily at an interval not exceeding five
years and undertake adjustment for variations in the cost of living ‘periodically’. A gap of five
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years for the revision of the base floor wage rate is way too long. And not mentioning the
periodicity of adjustment with respect to inflation means that instead of playing a dynamic role
in effecting upward revision of minimum wages across states and over time or for that matter
addressing inter-state differences in minimum wages, the floor will remain redundant in
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practice and even unable to protect vulnerable workers from erosion in their real wages.
As in the case of floor wage where criteria’s have not been laid out, in the case of minimum
wages, the criteria’s have been laid out in the wage rules but based on the old framework as
suggested by the 15th Indian Labour Conference (ILC) in 1957 and the subsequent Supreme
Court judgement of 1992 in the case of Reptakos Co. vs its workers. The criteria’s for
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calculation of minimum wages as given in the wage rules are as follows: (i) the standard
working-class family comprising of three adult consumption units (ii) a net intake of 2700 kcal
per day per consumption unit; (iii) 66 meters of cloth per year per standard working-class
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family; (iv) housing rent expenditure to constitute 10 per cent of food and clothing expenditure;
(v) fuel, electricity and other miscellaneous items of expenditure to constitute 20 per cent of
the minimum wage; and (vi) expenditure for children education, medical requirement,
recreation and expenditure on contingencies to constitute 25 per cent of the minimum wage.
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However, several arguments have been put forwarded stating that the above criteria for fixing
minimum wages will not lead to setting up wages at an adequate level, thereby affecting the
effectiveness of minimum wage policy in India (GOI, 2019a and Estupinan et al. 2020). Firstly,
it is stated that the demography, age and sex composition of the population have changed vastly
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between 1957 and 2020 and hence three adult consumption units for calculation of minimum
wages may not be adequate to meet the needs of the worker and their families. This is all the
more important in the Indian context, where minimum wage fixation doesn’t consider age and
years of experience of the workers. Hence, for all purposes, minimum wages are considered
both entry-level and exit level wages (Satpathy and Malick, 2020).
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Secondly, at present minimum wages are fixed based on calorie requirements only. However,
between 1957 and 2020, India has witnessed a massive change in household consumption
pattern corresponding to a higher development level and rising prosperity. It has resulted in a
change in consumption pattern (a preference for more diversified food) favouring non-cereal
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food items such as pulses, vegetables, milk and milk products, eggs and meat as per the official
National Sample Survey Office (NSSO) Consumption Expenditure Survey (CES) data at
various time points. Therefore, it is viewed that only calorie based estimation of food
expenditure and fixation of the minimum rate of wages would be a too narrow a criterion and
must be expanded to provide for protein and fat requirements (GOI, 2019a).
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Thirdly, in the present calculation of minimum wages, the estimation of entire non-food
expenditure is linked to the cost of estimating food and clothing expenditure. The wage rules
need to recognise that the workers and their families' needs as defined way back in 1957 lack
relevance in the present context due to changes in economic development and consumption
patterns. As per the latest NSSO 2011/12, share of non-food expenditure is growing across all
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monthly per-capita expenditure (MPCE) quintile groups with rising prosperity and the share of
food expenditure is declining over time as a proportion of total household expenditure.
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Therefore, estimation of non-food expenditure as a fixed share of food expenditure is not based
on sound economic rationale. Hence, non-food expenditure must be estimated independently
as per actual household consumption behaviour. Further, in the present criteria, essential non-
food items such as expenditure on transport and communications have not been considered. As
workers spend a lot of amount on these items, it would be appropriate to consider them to
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estimate the minimum wage rate.
Fourthly, expenditure on housing rent is the single most important component of the household
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consumption expenditure. Monthly house rent expenditure is significantly higher than the
combined expenditure on food and clothing in the urban context. Further, housing rent
expenditure varies significantly across the class of cities – metropolitan, non-metropolitan and
rural areas. Therefore, estimation of house rent expenditure as a fixed 10 per cent of food and
clothing expenditure across all types of areas/cities does not provide an evidence-based
estimation and requires to be reviewed20.
ot
Fifthly, while the wage rules have made it statutory to adjust the dearness allowance every six
months (i.e. April 1 and October 1), they do not elaborate upon the manner of adjustment of
dearness allowance and price indexes to be used in such adjustments. The absence of such
tn
crucial guidelines will lead to variations in the manner of adjustments and hence in dearness
allowance neutralisation rates across states, leading to the continuation of the inter-state
variations in minimum wage rates.
The above discussion suggests that the criteria of fixation and adjustment of floor wages and
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minimum wages need a scientific and evidence-based approach to set and maintain them at an
adequate level to provide meaningful and reasonable subsistence to the low paid informal and
migrant workers affected by the Covid-19 pandemic. In the subsequent section, drawing from
the Expert Committee Report on Determining the Methodology for Fixing the National
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Minimum Wage (hereafter referred to as Expert Committee), we have provided an alternative

evidence-based approach to the floor and minimum wage fixation and adjustment process. We
believe that wage fixation and setting as per the Expert Committee (EC) recommendations will
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20
The 15th ILC (1957) had recommended that house rent allowance should be fixed normatively corresponds to
the minimum area provided under the Government’s industrial housing scheme. However, in the wage rules the
house rent, which is major non-food expenditure, has been restricted to 10 per cent of food and clothing
expenditure.
help immensely in providing adequate subsistence to the wage earners, apart from boosting
aggregate demand.
ed
3. Wage fixation process and adequacy of wage levels in public work schemes
As discussed in the introductory section, to provide relief to the informal workers and return
migrants affected by the pandemic, the government has leveraged the existing MGNREGS. It
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also launched a new scheme called GKRA as a part of the fiscal package under ABA. The
objective of the GKRA scheme is similar to the MGNREGS except for a couple of differences.
While the MGNREGS provides 100 days of guaranteed wage employment every year to adult
members of the households across the country21, the GKRA offers one-time wage employment
for 125 days to migrant workers in six states. Further, the MGNREGS provides unskilled
manual work. In contrast, GKRA employment opportunities are not necessarily unskilled work
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only. It also involves laying optical fibre, railway works, and construction of national highways
and border roads, requiring semi-skilled, skilled and high skilled labourers. Lastly, while the
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MGNREGS wages are notified on April 1 of every financial year, the Central Government has
not yet clarified whether the GKRA unskilled and skilled workers will be paid as per wages
under the MGNREGS or based on corresponding state-level minimum rate of wages.
However, some Indian media have reported that workers under GKRA are paid based on
MGNREGS wages22. Further, as twelve central government departments are implementing this
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programme, the possibilities of different wage rates being paid by different departments cannot
be ruled out. In the absence of any clarity and as other schemes-based workers such as Asha
and Anganwadi workers are considered ‘volunteers’ and hence not paid state-level minimum
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wages, it is safe to assume that GKRA workers are paid invariably as per MGNREGS wage
rates. As wages under MGNREGS are way below the need-based minimum wages of
agricultural workers in 5 out of 6 GKRA states, it can be safely concluded that the income
transfer under the scheme is minimal (Table 1). This, among other things, also means that
wages under GKRA are not adequate and don’t correspond to the skills and productivity levels
of the migrant workers. Therefore, to better integrate the return migrant workers into the local
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labour market and provide them credible income support, GKRA wages need to be linked with
at least the minimum wages of various categories of skilled labourers under the MWA (1948).
Table 1: MGNREGS wage rates and minimum wage rates (in ₹ per day) in GKRA states
tn
MGNRE
MGNRE Minimum Minimum wage rates by skills category
GS wage MGNREGS
GS wages agricultural wage (latest months for 2020)
rates with wages as %
GKRA as % of rates
effect of unskilled
States minimum
from minimum
agricultur
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April 1 wages Wage With effect Semi- Highly

al wages Unskilled Skilled
2020 rates from skilled skilled
Odisha 207 67% 67% 308 Oct, 2020 308 348 398 458
Bihar 194 70% 66% 279 Oct, 2020 292 304 370 451
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Jharkhand 194 65% 65% 300 Oct, 2020 300 315 414 479
Madhya
190 83% 59% 228 Oct, 2020 323 356 409 459
Pradesh
Uttar
201 100% 60% 201 May, 2020 336 370 415 -
Pradesh
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21
Details of the Act and implementation progress may be seen at: https://nrega.nic.in/netnrega/home.aspx
22
Please see https://krishijagran.com/news/garib-kalyan-rojgar-abhiyan-here-s-how-you-can-earn-rs-202-per-
day-through-this-new-government-initiative/
10
Rajasthan 220 98% 98% 225 Aug, 2020 225 237 249 299
Average 201 81% 69% 257 297 322 376 358
ed
Source: Gazette notifications for relevant years and websites of relevant state labour departments.
Note: (1) In Odisha, Jharkhand and Rajasthan minimum wage rates for unskilled workers are considered as
minimum wage rates for agricultural labourers, whereas in other three GKRA states minimum agricultural wage
ratess are fixed separately from that of unskilled minimum wage rates; (2) In Uttar Pradesh, minimum wages are
fixed only for three skills categories.
iew
As MGNREGS is the central public employment programme in India23 and being implemented
across the states around the year, it is pertinent to discuss wage fixation procedure and adequacy
of wage levels under the programme. This is important more so during the Covid-19 pandemic
as the Government uses the programme as the main instrument to provide income and
livelihood support to the rural citizens and the unemployed returnee migrants from the cities
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affected by the lockdown. This can be gauged from the fact that while average monthly demand
for work under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
was 21.5 million households (between 2012-13 and 2019-20), the same increased to 36.1
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million, 43.7 million and 31.5 million households in May, June and July 2020 respectively24.
This reflects the massive demand for work under the scheme post lockdown and validates its
critical role.
However, a press note released by the People’s Action for Employment Guarantee (PAEG)
er
shows that most states cannot provide 100 days of guaranteed employment and 1.5 crore
persons who have demanded work have not got work 25. Further, the wage rates under the
MGNREGS have been criticised because of their low level, which does not even match up with
the agricultural minimum wage rates in 20 out of 21 major states26 (Appendix Table 1). The
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shortfall between the MGNREGS and agricultural minimum wages reaches a maximum of 34
per cent across states, with the average shortfall being 19 per cent27. Further, it has also been
analysed that over the past eight years (2012/13 to 2019/20), the daily nominal MGNREGS
wage at the national level has increased from ₹ 135 to ₹ 200 per day, while the real wage has
remained more or less constant in the range of ₹ 135 to 137 per day (Aggarwal and Paikra,
ot
2020). In contrast, average market rural and casual real wage rates have increased at a much
faster rate between 2011/12 and 2018/1928. The low level of MGNREGS wages compared to
the statutory minimum wages and even market casual wages and stagnation in MGNREGS real
wage rates has led to calls for raising the notified wage rates under the scheme to ₹ 600 per day
tn
23
During the 2020-21 financial year, the scheme has 13.28 crore active workers and has generated 175.33 crore
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man-days of employment benefitting 5.53 crore rural households. For the detail performance of the scheme
visit: https://www.nrega.nic.in/netnrega/mgnrega_new/Nrega_home.aspx
24
In July 2020, number of households sought work under the programme reduced a bit to 31.5 million as casual
labourers returned to work in farms for sowing Kharif crops.
25
As reported in https://www.newsclick.in/Budgetary-Allocation-Exhausted-COVID-19-Package-Released-
ep
NREGA-Tracker
26
Uttar Pradesh is the only state where agricultural minimum wages exactly matches up with the MGNREGS
wages. This is primarily because agricultural wages in the state are not adjusted with dearness allowance in
every six months (unlike minimum wage rates for non-agricultural workers) and hence wage levels are lower.
27
The average shortfall would be further higher, if all the states follow a uniform method and timeline to revise
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and adjust their basic agricultural minimum wages.

28
In a recent workshop at the V. V. Giri National Labour Institute on 7th October 2020 a presentation by Xavier
Estupiñan (ILO, wage specialist) on the basis of NSSO data presented that daily rural real wages have increased
from ₹ 203 to ₹ 245 during 2011/12 to 2018/19, while the daily casual real wages have increased from ₹ 191 to
₹ 237 during the corresponding period.
11
and strengthening and expanding the scope of MGNREGA by increasing the mandatory
workdays to 200 days and extension of MGNREGA to urban areas29.
ed
One of the main reasons for the low level of MGNREGS wages can be attributed to wage
fixation, revision and adjustment provisions under the Act. The MGNREGA has two important
provisions relating to the type of wages to be paid under the programme30. Section 6.1 of the
Act empowers the Central Government to specify through notification either a single wage rate
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for the entire country or different wages rates for different areas, notwithstanding anything in
the MWA (1948). Further, it stipulates that wage rate specified from time to time under any
such notification shall not be at rate less than sixty rupees a day. Further, Section 6.2 of the Act
states that until such time the Central Government fixes the wages under section 6.1, the
minimum wages for agricultural labourers fixed by the State Government under Section 3 of
the MWA, 1948, shall be considered as the wage rate applicable to that area.
v
A comparison of Section 6.1 and 6.2 of the MGNREGA suggests that unlike in 6.2 where the
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basic minimum rate of wages of agricultural labourers under the MWA, 1948 are fixed and
revised to a large extent by states as per set need-based norms in every five years and adjusted
concerning inflation in every six months, under 6.1, the procedure of fixation of MGNREGS
basic wage rates and its adjustment process with respect to inflation have not been laid out.
Further, there is no clarity relating to how ₹ 60 per day have arrived as the basic MGNREGA
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wage rate as given in Section 6.1. It was pointed out that this figure has been arrived arbitrarily
without supported by any methodology and was lower than even the minimum agricultural
wage rates of some of the states at the time of enactment in 2005 (Sivakumar 2010; Sankaran
2011). Given the alternative provisions in the Act and no clarity relating to the process of wage
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fixation and adjustment under Section 6.1, therefore, at the time of launching the MGNREGS
scheme in 200 districts in 2006/07, the Central Government invoked Section 6.2 as a transitory
measure.
The above decision enabled the Government to link wages under the MGNREGA as per the
minimum wages of agricultural labourers fixed by various state governments. In the first year
of implementation in 2006/07, MGNREGS wages per day varied in the range of ₹ 50 in Gujarat
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to a high of ₹ 125 in Kerala (Appendix Table 2)31. However, in the immediate next year, i.e.,
in 2007/08, 10 out of 27 states where the scheme was being implemented revised their
minimum wages for agricultural labourers upwardly, leading to demand more funds from the
tn
MGNREGA towards wage payment32. In at least four states such as Haryana (from ₹ 99 to ₹
135 a day); Madhya Pradesh (from ₹ 63 to ₹ 85 a day); Nagaland (from ₹ 66 to ₹ 100 a day);
and Maharashtra (from ₹ 47 to ₹ 72 a day) this hike was very steep, while in the rest six states,
the upward revisions were modest (in the range of ₹ 9 to ₹15 a day). These upward revisions
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by states were not unreasonable as have been argued elsewhere, as Section 3.1 of the MWA
(1948) empowers the state governments to revise the basic rate of agricultural wages in every
29
The call was given by MGNREGA Sangharsh Morcha as reported in the Hindu. For details please see
ep
https://www.thehindu.com/news/national/amid-demand-surge-14-lakh-families-have-reached-annual-
mgnrega-work-limit/article32006305.ece
30
Please see Section 6 of the Act available at:
https://www.indiacode.nic.in/bitstream/123456789/2014/1/A2005-42.pdf
31
Based on Table 1.1 (page 7) in MGNREGA Sameeksha where data is provided for 27 states, excludes union
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territories. For details please see: https://nrega.nic.in/Circular_Archive/archive/MGNREGA_SAMEEKSHA.pdf

32
Some of the states who revised their rates between 2006/07 and 2007/08 were Arunachal Pradesh (from ₹
57 to ₹ 67); Assam (from ₹ 66 to ₹ 76); Bihar (from ₹ 68 to ₹ 77); Haryana (from ₹ 99 to ₹ 135); Karnataka (from
₹ 69 to ₹ 74); Madhya Pradesh (from ₹ 63 to ₹ 85); Maharashtra (from ₹ 47 to ₹ 72); Manipur (from ₹ 72 to ₹
81); Nagaland (from ₹ 66 to ₹ 100); Odisha (from ₹ 55 to ₹ 70).
12
five years and through a tripartite consensus33 to adjust minimum rates of wages in line with
price indexes in every six months to provides adequate and effective protection to the workers
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at all times and in all locations. However, it may have happened that some of the states, which
are not prompt enough in undertaking this revision and adjustments before MGNREGA, started
undertaking timely revisions to draw more money from the MGNREGA towards wage bills to
provide rightful benefits to the workers.
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As the Central Government entirely supports the wage burden under the Act, the hike in
minimum agricultural labour wages by ten states created apprehension that the MGNREGA
will be financially unsustainable in the long-run if other states are resorting to a similar upward
revision in future under the MWA, 1948. Therefore, with effect from January 1, 2009, the
MGNREGA wage fixation was moved from Section 6.2 to Section 6.1 of the Act, empowering
Central Government to notify MGNREGA state-wise wage rates for each financial year.
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Given the above development and in the absence of any built-in mechanism for fixation of
basic wage rates under Section 6.1 of the Act, the Government through a notification issued on
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December 15, 2009, enhanced the basic wage rate under the MGNREGS from earlier ₹ 60 per
day to ₹ 100 per day. Again, there was no clarity relating to the method and evidence used for
this upward revision34. Further, to arrive at an MGNREGS wage distribution across states, in
twenty states where minimum agricultural wages were below ₹ 100 per day before December
1, 2008, the Government enhanced these wages to ₹ 100 per day35 and in four States such as
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Goa, Haryana, Kerala and Mizoram where the minimum agricultural wages were higher than
₹ 100 per day, the Government protected these higher wages. Based on the aforesaid decision,
the Central government notified a new MGNREGS state-specific wage structure under Section
6.1 of the Act (Appendix Table 2, column 5). However, the State Governments were given the
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flexibility to notify higher wage rates above the central rates and pay the difference from their
budgetary resources. As this arrangement will put a substantial financial burden on the states
and an unsustainable arrangement, none of the state governments have adopted it.
Apart from non-clarity relating to the methods fixation of basic wage rates under MGNREGA,
Section 6.1 also doesn’t mention the wage adjustment process to account for price changes,
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which is the other reason for the prevalence of low nominal wages under the programme.
Therefore, after delinking MGNREGS wages from that minimum agricultural wage rates from
January 1, 2009, no price adjustment was made for two successive years, and real wages
tn
continued to stagnate. This is despite the fact that a wage working group36 constituted by the
Ministry of Rural Development (MoRD) in March 2010 under the Chairmanship of Professor
Jean Dreze recommended to index MGNREGS wages to the price level using the Consumer
Price Index for Agriculture Labour (CPI-AL) with April 1, 2009, as the base to protect the real
wages of the workers at least to the level of ₹ 100 per day at April 2009 prices. The group
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further recommended to adjust the MGNREGS wages upwards in line with the CPI-AL every
six months or at least once in a year. Only on January 1, 2011, administrative decisions were
taken, and wages were adjusted with CPI-AL of the respective States/UTs at the end of every
financial year. Since then two committees have been constituted by the MoRD, i.e., Mahendra
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33
In 1988, Labour Ministers’ Conference took the decision that minimum wages be linked to the CPI-IW to
address changes in cost of living over time.
34
The only reference for this increase can be found in the 6 th July 2009 budget speech of the then Finance
Minister Pranab Mukharjee which was based on Congress 2009 election manifesto that had promised at least
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100 days of work at a real wage of ₹ 100 per day as entitlement under the MGNREGA.
35
However, for four states (Arunachal Pradesh - ₹ 80; Jharkhand - ₹ 99; Manipur - ₹ 81.4; and Odisha - ₹90), the
revised rates were not notified. The reasons thereto are not available in official document.
36
The wage working group is one of the six working group constituted by the Ministry of Rural Development
(MoRD) to look into implementation aspects of the MGNREGA.
13
Dev Committee in 2015 and Nagesh Singh Committee in 2017 to suggest indexing of
MGNREGS wages with appropriate price index.
ed
The Mahendra Dev Committee recommended that the consumption basket for both CPI-AL
and Consumer Price Index-Rural Labour (CPI-RL) was based on 1983-NSSO, Consumption
Expenditure Survey, which is outdated. The Committee noted that CPI-Rural (CPI-R), which
was introduced in 2010 by the Central Statistical Organisation had a more recent weighting
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diagram. Therefore, they recommended indexation of MGNREGS wages with CPI-R, as the
consumption basket of CPI-R is of more recent vintage than CPI-AL. The Committee further
recommended that the CPI-R Index for an average of 12 months be the proper index for
indexing MGNREGS wages instead of indexing MGNREGS wages with CPI-AL of December
month only. The Nagesh Singh Committee which was constituted after that while endorsing
Mahendra Dev Committee recommendations37 had estimated financial requirement of ₹ 600
crores for shifting from CPI-AL to CPI-R38. However, given the extra-budgetary implications,
v
the proposal has not yet received the Finance Ministry's approval. Hence, MGNREGS has
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failed to thoroughly neutralise the workers' wages to price changes to date.
Many civil society organisations have criticised the changed wage fixation process under
MGNREGA from Section 6.2 to 6.1 and its inability to fully neutralise the workers' real wages
as the main reasons for the prevalence of undue low level of MGNREGS wages. They have
argued that payment of MGNREGS wages less than the minimum agricultural wages under the
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MWA, 1948 for undertaking similar work amounts to forced labour and in violation of Article
14 and Article 23 of India's Constitution. Similarly, the January 1, 2009, decision of the Central
Government making itself sole authority to fix MGNREGS wages under Section 6.1, evoked
displeasure from some of the state governments such as Tripura, Karnataka, Punjab, West
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Bengal, Madhya Pradesh and Himachal Pradesh, who proposed amendment to the said order
as the state minimum wage rates were higher than notified MGNREGS wages (Sivakumar
2010). Further, the Andhra Pradesh High Court in a case filed by NREGA workers suspended
the operation of Section 6.1 of the MGNREGA stating that the Government being the agency
for implementing minimum wages, cannot itself violate minimum wages39.
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However, the Government has argued that the nature of work assigned under the MGNREGA
is separate and distinct from those listed under the Schedule to the MWA (1948). Further, it
argued that MGNREGA work should be viewed as a social safety net. It is meant to be used as
tn
a last resort to supplement the rural households' livelihood security on account of temporary
distress conditions. Hence, the intention is not to force unwilling labour on any person. These
are precisely the reason why Section 6.1 prescribes wage rates under MGNREGA in a way that
clearly distinguishes it from minimum wages for agricultural labourers. Given the contrasting
arguments, in a recent judgement on February 26, 202040, the Madras High Court in the case
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of R. Gandhi vs The Union of India while accepting the submission of the Government noted
that the rights claimed under the MGNREGA would be governed by its provisions and cannot
be construed to be a scheme or an Act for encouraging exploitation of labour to violate Article
23 of the Constitution of India. It further stated that as the nature of the claim, the work and the
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projects that are to be executed are different and not a stable workforce engaged for performing
any regular work, therefore the same is not a violation of Article 14 of the constitution. This
37
Recommendations may be seen at: https://rural.nic.in/press-release/minimum-wages-mgnrega
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38
As reported in Indian Express and may be seen at: https://indianexpress.com/article/india/mgnrega-wages-
less-than-minimum-farm-wages-in-15-states-panel-4743412/
39
Andhra Pradesh is one of the states where notified MGNREGS wages at ₹ 80 per day was less than the state
agricultural minimum wages (₹ 125 per day) by ₹ 45 per day.
40
The details of the case may be seen at: https://indiankanoon.org/doc/181924954/
14
judgement brought somewhat finality to the ongoing legal battle, thereby firmly establishing
Central Government as the sole authority to fix MGNREGA wages under Section 6.1 of the
ed
Act. However, the said section doesn’t provide any criteria for fixation of basic wage rates, its
revisions, and adjustments.
While the legal window to seek parity between MGNREGS wages and state agricultural
minimum wages is relatively narrow now, the Government could have addressed the issue of
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fixation of MGNREGS wages at an adequate level under the recently enacted wage code in
2019. The wage code which is a Central Act has a provision of fixation of a binding universal
‘national floor wage’ by the Central Government based on minimum human needs of the
workers and their families, above which the state government shall fix their respective
minimum wage rates. The national floor wage, which would be decided through evidence-
based consultative mechanisms with social partners and state governments, could have been
v
extended to MGNREGA as its basic wages, subsequent to which the MoRD could have carried
out appropriate price revision (on a bi-annual or on annual basis) to protect the real wages of
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the workers. However, this options of even linking floor wage under the wage code as the
MGNREGA basic wages stand foreclosed as Section 66 of the wage code41 categorically states
that “nothing contained in this Code shall be deemed to affect the provisions of the Mahatma
Gandhi National Rural Employment Guarantee Act, 2005 or any scheme made thereunder”.
Inclusion of this non-obstante provision, among other things, denies any scope for future inter-
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linkage between floor wage and statutory minimum wage rates with MGNREGS wages,
thereby making Section 6.2 of the MGNREGA, 2005 virtually ineffective. To that extent, the
wage code also restricts the extent of its universal applicability charm. These developments in
the judiciary and legislative space will significantly limit the effectiveness of MGNREGA in
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the future and thereby renders income transfer under the scheme unviable for the informal and
migrant workers and their families. This calls for finding an alternative solutions within the
Section 6.1 of the MGNREGA (through relevant amendments) and through administrative
decisions – to set MGNREGS wages at an adequate level by following evidenced-based and
need-based methodology and linking MGNREGS wages with appropriate price indexes –
ot
which is taken up in the next section.

4. Towards strengthening wage policies in India
The preceding sections discussed that wage policies could form an essential element of an
tn
integrated strategy to protect the informal and migrant workers' incomes affected by lockdown-
induced job and income losses. The statutory minimum wages through its redistributive
mechanism and MGNREGA wages as an effective fiscal stimulus could help alleviate the
hardship faced by the workers and returnee migrants. The increase in the purchasing power of
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low-income workers with a high propensity to consume will boost aggregate demand,
catalysing private investment, and give significant momentum to the economic recovery
process. However, for wage policies to act as an effective antidote, wage levels and their
adequacy along with full implementation are of paramount importance.
ep
It was discussed that the level of both statutory minimum wages and MGNREGS wages are
very low in India, and several implementation bottlenecks inhibit them from delivering results.
The low level of statutory minimum wages across many Indian states can be attributed
primarily to the existing wage fixation methods, non-uniformity in methods used, and
adjustment process across states. Further, recently enacted wage code and wage rules have not
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succeeded entirely in addressing these issues. Similarly, it was discussed that Section 6.1 of
41
Please see Section 66 of the Code on Wages (GOI, 2019c) at
http://egazette.nic.in/WriteReadData/2019/210356.pdf
15
the MGNREGA, 2005 doesn’t provide any mechanism for fixation and adjustment process of
MGNREGS wages and hence basic wages as argued have been set arbitrarily and price
ed
adjustments continue to be done with an outdated index. These limitations in wage policies
coupled with implementation issues are reflected in terms of the prevalence of the low level of
statutory minimum wages and MGNREGS wages, thereby limiting these policies' very
effectiveness in protecting income and standard of living informal and migrant workers.
iew
With this background, we propose an alternative approach to set and revise minimum wages
and MGNREGS wages at an adequate level, in the subsequent section. This, we believe, will
significantly strengthen the wage policies in addressing their stated objectives of poverty and
inequality and support a human-centred economic recovery process.
4.1 Alternative approach to set minimum wages at an adequate level
v
An alternative approach to set statutory minimum wages at an adequate level can be drawn
from the Expert Committee (EC) report on determining the methodology for fixating national
re
floor minimum wage (GOI, 2019a)42. The EC in accordance to the provisions of the wage
code43 and based on scientific and evidenced based approach had suggested a need-based floor
wage and also had elements for fixation of statutory minimum wages by taking into account
changes economic development44, demography, family size, consumption patterns, nutritional
intakes and work intensity since 1957, when the 15th ILC provided its recommendations for the
er
first time.
Based on the latest evidence from official statistics; it suggested enhancing the consumption
unit from 3 to 3.6 units per family to calculate wages. It had also suggested shifting from the
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existing calorie based approach to a nationally representative and culturally palatable balanced
diet approach to fix national floor wage45. The updated evidence established a recommended
intake of 2400 calories, 50 grams of protein and 30 grams of fat per day per capita for
estimating the cost of a food basket. As far as non-food cost is concerned, it had proposed to
estimate the same as per household consumption behaviour and not as a fixed percentage of
food and clothing cost, as is done presently. Besides, the EC had also recommended expanding
ot
the non-food basket to include essential items such as transport and communication (including
internet) expenditure and also to estimate house rent allowance as per actual expenditure
incurred and not as a fixed 10 per cent of food and clothing expenditure as provided in the
tn
wage rule. Applying the above methodology to the Consumption Expenditure Survey (CES)
data for 2011/12 (NSSO 2014), the EC had recommended fixing the national floor wage46 at
375 Indian rupees per day (as per July 2018 prices), irrespective of skill level, occupation and
location (Table 2).
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Apart from suggesting a national floor wage level, the EC had also suggested regional floor
wage levels as an alternative arrangement according to the provision of the wage code. The
regional floor was suggested considering a scenario wherein implementing a single national
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42
The authors were associated with the EC as its Chairman and members respectively.
43
The wage code provides for fixation of either a single national floor or different national floor for different
geographical areas of the country by the Central Government on the basis of minimum human needs of the
workers and their families.
44
Engel's law is an economic observation stating that the proportion or share of income spent on food decreases
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as income rises, even if absolute expenditure on food rises.

45
See report of the EC (GOI, 2019a:33-52) relating to detailed methodology for floor wage-setting.
46
The EC had used the term ‘national minimum wage’ as per the Code on Wages Bill, 2017. However, in 2019
version of the bill the term ‘national minimum wage’ was replaced with the term ‘floor wage’. Hence, in this
paper the term floor wage has been used.
16
floor is not feasible for a vast and diverse country like India. To estimate the regional floor
wage, the EC had grouped states into four regions (Region 1 to Region 4) by ranking states in
ed
a composite index that considered factors such as state income, cost of living, labour market
situation and women empowerment. Among the four regions so constructed, Region-1
comprises the least developed states, while Region 4 contains India's developed and advanced
states47. Subsequently, all the north-eastern states (except Assam) were clubbed into Region 5
because of their similar socio-economic, labour market and geographical situations (Appendix
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Table 3). After forming the regions, the EC had estimated the level of floor wages at the
regional level varying from rupees 342 per day in Region-1 to rupees 447 per day in case of
developed states in Region-4, as per July 2018 prices (Table-2).
Table 2: Level of the national and regional floor and statutory minimum wage rates (in ₹, July
2018 prices) as per the balanced diet approach
v
2,700 calorie level
2400 calorie level National/Regional Statutory
re
National/Regional National/Regional Floor Wage Minimum Wage
Daily Wage Total Monthly Daily Wage Total Monthly
Rates/day Wages Rates/day Wages
National 375 9,750 407 10,582
Region 1
Region 2
342
380
er 8,892
9,880
372
412
9,672
10,712
Region 3 414 10,764 449 11,674
Region 4 447 11,622 480 12,480
pe
Region 5 386 10,036 418 10,868
Source: Report of the Expert Committee on Determining the Methodology for Fixing the National Minimum
Wage (GOI 2019a)
In addition to recommending the floor wage levels corresponding to 2400 calories, using
similar methods, the EC had also estimated the possible level of national minimum wages
ot
corresponding to the 2700 calories which the central and state governments may consider as
the statutory minimum rate of wages to be fixed above the floor wage in their respective sphere.
Based on the method described above, the EC had provided an estimation to enable the Central
tn
Government to fix its statutory minimum wage rates at 407 rupees per day irrespective of skill
level, occupation and location (Table 2). Subsequently, it had also provided estimation relating
to the possible level of regional statutory minimum wage rates by applying regional prices to
the national food and non-food consumption basket, while keeping the other fixation norms
constant. Accordingly, it had suggested statutory minimum wages for unskilled workers for
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various regions ranging from rupees 372 per day for states in Region-1 to 480 rupees for states
in Region-4 (Table 2) for consideration of respective state governments falling under specific
regions. If accepted and incorporated in the wage rules, this methodology will help set up both
floor wages and minimum rate of wages at an adequate level, bring uniformity in wage fixation
criteria across states and allow for wage differentiation across regions to the extent regional
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prices differ.
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47
The report of the EC (GOI 2019a: 43-47) provides a detailed account of the methods related to categorization
of states into regions and the estimation of regional floor minimum wage rates.
17
Table 3: Percentage gap between latest notified unskilled minimum wage rates and recommended
national and regional floor and minimum wage levels by the EC for Region 1
ed
% Gap between EC recommended level of unskilled wage rates with that
Latest of latest unskilled minimum wage rates fixed by states
unskilled Gap between Gap between Gap between Regional
Region 1 States minimum National floor wage Regional floor wage minimum wage (₹
wage rates (₹ 375/day) & state (₹ 342/day) & state 372/day) & state
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(in ₹/day) unskilled minimum unskilled minimum unskilled minimum
wages wages wages
Odisha 308 18% 10% 17%
Assam 282 25% 18% 24%
Bihar 292 22% 15% 22%
Jharkhand 300 20% 13% 20%
v
Madhya Pradesh 323 14% 6% 13%
re
Uttar Pradesh 336 10% 2% 10%
West Bengal 296 21% 13% 20%
Source: Latest notifications of the State Labour Departments for unskilled minimum wages in 2020 and Report
of the Expert Committee on Determining the Methodology for Fixing the National Minimum Wage (GOI 2019a).
er
Comparing the percentage gap between prevailing state-specific unskilled minimum wages
with that of national/regional floor wage and regional minimum wage rate for Region 1(less
developed states) recommended by the EC is made in Table 3. The analysis shows that
unskilled minimum wages in most of the states in Region 1 especially in Assam, Bihar,
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Jharkhand and West Bengal at present is much lower compared to the EC recommended single
national floor wage level of rupees 375 per day but relatively closer to the regional floor wage
level of rupees 342 per day. This attests that setting a regional floor wage anchored on regional
cost of living would be a more feasible option for India than setting a single national floor wage
based on the average cost of living of all regions taken together. Further, as far as percentage
ot
gap between prevailing unskilled minimum wages in the states and the EC’s option of regional
statutory minimum wage levels is concerned, it has much to do with non-uniformity in wage
fixation, revision and adjustment criteria across states than with inter-state differences in the
cost of living. Therefore, once the inter-state differences in minimum wage fixation and
tn
revision criteria’s have been made uniform as per EC’s recommendations and a standard
method of calculation is followed across states, the differences in minimum wage levels
between the states in Region-1 will narrow down and accordingly wages will move upward
and closer towards the EC recommended wage levels. The same also holds for the other four
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regions of the country as well.

Therefore, it is crucial to have a closer look at the EC report and incorporate its alternative
approach of wage determination as appropriate in the wage rules, which is under consideration
of the Government stating the exact methods of fixation of need-based floor wages and
statutory minimum wages. This policy intervention would enable the Central and State
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Governments to set these wage levels at an adequate level based on a uniform methodology
after the wage code becomes effective. Along with this, elaborating a method for adjustment
of dearness allowance and its regular adjustment will help maintain minimum wages at an
adequate level with respect to price changes. These measures will also help align growth in real
Pr
18
minimum wages in line with growth in labour productivity 48 and offsetting the subdued
demand situation grappling the economy.
ed
4.2 Alternative approach to set MGNREGA wages at an adequate level
There can be at least four alternative approaches to set and adjust MGNREGS wages.
Corresponding to the approach adopted, the wage rates under MGNREGS shall vary from an
iew
adequate level of wages to a poverty line wages. But each of these proposed approaches is
better than the existing approach wherein MGNREGS basic wages are fixed arbitrarily at ₹100
per day with effect from April 1, 2009, with no subsequent revision with updated price index
thereafter. There are no past instances in India to suggest where basic wages in any employment
have been allowed to languish for over a decade without revision. Below, we have outlined
each of these approaches in greater detail, including their implications on workers, requirement
v
of resources and challenges involved (Table 4).
The best approach for MGNREGA wage setting can be found in its objective, which aims at
re
ensuring ‘livelihood security’ to the poor rural households through 100 days of guaranteed
unskilled manual work. And this guaranteed work is expected to provide a ‘minimum standard
of living’ to the poor workers and their families in times of distress and as a last resort.
Therefore, it is inconceivable to think that MGNREGA will be able to provide livelihood
er
security without guaranteeing a statutory minimum wage. Hence, the provision of more jobs in
times of distress shouldn’t be put forward as a sensible justification for offering sub-minimum
wages under the programme. Instead, as a last resort and in a crisis, wage-income transfers
should be adequate enough to allow the workers and their families to avail a decent minimum
pe
standard of living
Further, the argument that the nature of work under MGNREGA are ‘distinct’ from that of
work under MWA, 1948 and hence the payment of sub-minimum wages, doesn’t hold much
ground as both occupations involve ‘broadly’ similar nature of work which unequivocally
requires ‘manual’ labour with no skills. Even if MGNREGA involves piece-rate work, the
ot
legislative provisions provide for at least time rate wages to the piece-rate workers both under
MWA, 1948 and wage code. Even internationally, given that the piece-rate system is
complicated to administer, information available from 44 public works programs in 37
countries shows that 77 per cent of the programs paid daily wages. In contrast, only 14 per cent
tn
paid piece rates (Subbarao et al., 2013). Therefore, return from manual and unskilled
occupations under two central legislations should be measured and valued similarly through a
need-based approach in such a way that these returns at least ensure a minimum standard of
living. Therefore, the best option for MGNERGA is to provide at least the state level unskilled
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minimum wages 49. In this way, by setting wages at an adequate level, MGNREGA would
successfully protect the standard of living and income of the migrant and informal workers,
while contributing effectively as a fiscal policy tool in raising village incomes and demand
(Table 4).
ep
Activating the best options of linking MGNREGS wages with that of state minimum wages, at
this point requires relevant amendments to Section 6 of the MGNREA as well as Section 66 of
48
As per the Global Wage Report: 2020-21 (ILO, 2020f), in India, the annualized real minimum wage grew at a
Pr
rate of 3.9 per cent, while annualized productivity growth happened at faster rate of 5.5% between 2010-2019.
49
The code on wages has stopped the practice of fixation of minimum wages by scheduled
employment/occupations and provides for fixation of minimum wages by skills levels. So in future as there would
be no fixation of minimum wages for agricultural labourers by states and hence, relevant wage reference for
MGNREGA would be state level unskilled minimum wages.
19
the wage code. Enough reasons exist for such amendments within these regulations' objectives,
but the will to do so is lacking due to budgetary constraints. However, at least the Government
ed
should consider the best option as a transitory measure and immediately implement the same
for recovery of the pandemic stricken economy with a sunset clause for two years.
The second-best approach could be at least to benchmark ‘basic’ MGNREGS wages with that
of national floor wages50 to be set under wage code by the Central Government at a level below
iew
the state statutory unskilled minimum wages. This measure is vital to set the MGNREGS basic
wages at an appropriate level as it was cited that the basic wages set in 2009 at ₹ 100 per day
were decided arbitrarily without supported by any method. This revision of basic wages,
therefore is long overdue. This approach may entail relevant amendments to the respective
legislation, but this will ensure reasonable pay to the workers with a relatively smaller impact
on the MGNREGA budget.
v
Table 4: Alternative approaches to MGNREGS wage setting and adjustment process
re
Available Approaches Results Challenges
Options
Best option Linking MGNREGS basic wages Win-win situation for both the Requires amendment of
with state-level minimum wages for central legislations and ensures Section 6 and Section 66
unskilled labourers so that similar policy coherence. While of the MGNREGA and
nature of work can be paid similarly
er MGNREGA can effectively wage code, respectively.
through a need-based criteria and ensure a minimum standard of The budget constraint
subsequently undertake six-monthly living in a time of distress could be a challenge but
adjustments to account for changes in through wage employment, the given the objective of
the cost of living as per the wage code wage code can widen its lifting people out of
and wage rule. There could be a full objective of the universal poverty and placing them
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linkage (100%) or a partial linkage 51 applicability of minimum in a better productive and
to the unskilled minimum wages. wages and timely payment of remunerative job is the
wages to all wage earners ultimate goal of
The Government should consider this including those involved in MGNREGA, adequate
option and immediately implement public employment income transfer under the
for facilitating the recovery of the programme such as programme should receive
pandemic stricken economy as part of MGNRGEA. priority over budget
ot
fiscal measures even with a sunset constraint in a crisis.

clause for two years.
Second best Benchmark MGNREGS ‘basic’ Extension of sub-minimum Requires amendment of
option wages with that of ‘basic national wages in the form of statutory Section 6 and Section 66
tn
floor wages’ under the wage code and floor wages to the MGNREGA of the MGNREGA and
subsequently undertaking the cost of workers so that the workers wage code, respectively.
living adjustments in every six and their families are Budget constraint may be
months as per average changes in reasonably protected. The an issue but not as big as
CPI-R as suggested by Mahendra Dev wage code's objective shall an issue as in the case of
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Committee. also be fulfilled as it mandates ‘best option’ given that

that no wage earners in the floor wages shall be below
the state-specific statutory
50
This recommendation is based on the assumption that floor wage shall be fixed as per the minimum standard
ep
of living of a worker and in consultation with the state governments and social partners. Hence, the monetary
value of basic floor wages so arrived shall be more acceptable and higher than the existing MGNREGS wages
rates in many states. It may so happen that in some developed states the existing MGNREGA wage rates might
be higher than the estimated floor wage rates under the wage code and in such a situation higher MGNREGS
wage rates must be protected.
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51
In Nepal, the Prime Minister Employment Program introduced in the FY 2018/19 in line with Article 33 of the
Constitution of Nepal, which considered employment as the fundamental rights and guarantees every Nepali
the right to have employment. All the registered unemployed citizens should get employment opportunities for
at least 100 days in a year and if the government fails to employ those registered with the ESCs, the government
must pay them 50 per cent of the minimum wage as unemployed allowance.
20
This approach will also address the country fall below the statutory minimum wages of
issue of arbitrary fixation of floor. unskilled labourers.
MGNREGA basic wages in 2009 at ₹
ed
100 per day.
Minimalistic Benchmark MGNREGS ‘basic’ Extension of poverty line An administrative
option wages with that of the per day ‘basic’ wages to MGNREGA decision is required, while
equivalence of rural poverty line. If workers will ensure that the no amendment in
one considers the Rangarajan Expert workers and their families' legislation is required.
iew
Group (2014) poverty line, per day, body and soul are at least Budgetary implications
basic wages would be around ₹ 186 as protected, if not more. Indeed would be there but these
per 2011-12 prices. This poverty line this approach would be a cost escalations would be
basic wages may be updated to the relatively better option than the concomitant to the
latest time point by indexing with existing approach wherein changes in the cost of
CPI-R to protect the workers' real basic wages of ₹ 100 per day living and development
wages. Once the updated basic wage set in 2009 are way below the level since April 2009
v
is arrived at, the subsequent cost of poverty line wages. when the last basic wage
living adjustments may be done every revision happened under
six months as per CPI-R changes. MGNREGS.
re
Last option Constitution of an MGNREGS wage Harmonious determination of Requires amendment to
(Social fixation advisory board with members MGRNEGS wages supported Section 6.1 of the
dialogue from State Governments, civil society by evidenced-based MGNREGA to
based) organisations, experts and Central methodology and wages so incorporate wage-setting
Government officials to determine the arrived at shall be acceptable to norms and adjustment
norms for fixation of MGNREGS all stakeholders and certainly process into the main body
er
wages as per minimum standard of
living distress situation and its
shall be higher than the
existing basic wage of ₹ 100
of the Act – a process
similar to the wage code.
revision/adjustment process. Based rupees per day. This wage Additional resource
on consultation with the advisory would also protect the requirement for this option
pe
board, the Central Government shall minimum standard of living of shall depend on what
notify the basic wages and undertake the workers and their families constitutes minimum
six-monthly price adjustments as set out in the Act. living standard in
concerning CPI-R. temporary distress
conditions and a situation
of last resort as agreed in
the advisory board.
ot
In addition to the above two approaches, one could think of a minimalistic option of
benchmarking MGNREGS basic wages with that of poverty-line wages in the first stage and
tn
then subsequently updating the basic wages so arrived at with CPI-R in every six months to
arrive at MGNREGS daily wages (Table 4). In this way, MGNREGS wages will be set at a
level to protect the body and soul of the workers and their families and be implemented through
an administrative decision.
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The last option is to determine MGNREGS wage rates by evolving evidences-based norms and
methods to define what constitutes ‘basic minimum standard of living’ to provide livelihood
security to the poor in times of temporary distress condition and as a last resort. This method
and definition may undertake international pieces of evidence in this regard. At present, this
basic minimum standard of living is monetarily fixed at ₹ 100 per day. However, this rate has
ep
been set arbitrarily without methodological backing and is one of the prime reasons behind the
prevailing low level of MGNREGS wages. Therefore, there is a need to constitute an
MGNREGA specific wage fixation advisory board with members from state governments, civil
society organisations, experts and central government officials to arrive at a method and
estimate a monetary value for MGNREGS wages. Based on consultation with the advisory
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board, the central government may notify the basic wages and also undertake price adjustment
every six months. However, to bring this plan to fruition, Section 6.1 of the MGNREGA
21
requires amendment incorporating wage-setting machinery, norms, and adjustment process
into its main body.
ed
5. Conclusion
In pre-Covid times, India was facing more of a wage problem than a job problem, given the
pervasive pool of low-quality employment as a share of total employment in the country. The
iew
spread of Covid-19 pandemic and resultant stringent lockdown measures has aggravated this
problem further by seriously affecting millions of low-wage workers' livelihoods and earnings.
The informal and migrant workers being at the bottom of the labour market and hard to reach
are worst hit by the pandemic. Studies show that in India, jobs and wage losses suffered by the
informal and migrant workers are much higher than their formal counterparts. It is further
predicted that the pandemic would push 41 million Indians into extreme poverty and further
v
deepen existing income inequality in the low-end labour market.
In order to mitigate the economic impact of the pandemic, the GOI has taken a series of short-
re
term measures immediately after the lockdown to protect workers’ wages and incomes and also
medium to long-term measures to stabilize the economy. In all total, the GOI has deployed
ABA stimulus package in three phases amounting to 15 per cent of the GDP to help people,
businesses, and low-income workers. While the size of stimulus support was comparable to
er
similarly placed countries, the stimulus package's composition was subject of much criticism.
It has been often stated that a significant part of the support was meant to correct supply-side
disruptions than to raise demand. Further, the targeted social assistance package in the form of
cash and in-kind transfers that were extended to poor households and vulnerable workers as
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part of fiscal actions were considered modest, and the demand for universal monthly cash
transfers was resolutely rejected.
As a part of the fiscal policy sub-component of the ABA stimulus, the GOI enhanced
allocations under MGNRGS and introduced a new GKRA scheme to provide employment to
the return migrant and affected rural citizens. Mindful of the fact that MGNREGS wages and
ot
statutory minimum wages are an essential element for providing protection to the workers and
reviving the economy, the GOI had increased average MGNREGS wages by ₹15 per day and
announced the establishment of a statutory national floor wage and extension of legal coverage
of minimum wages to all wage earners. While these prompt actions are noteworthy, the extent
tn
to which these interventions will help protect and restore the informal and migrant workers'
income is under question, given the low MGNREGS wages and statutory minimum wages in
India. The situation is further complicated because of the inability of the states to provide 100
days of guaranteed job under MGNREGS including delay in wage payments and rejection of
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wage payments and poor compliance to the statutory minimum wages.

In this context, this essay examined issues with the existing wage setting, revision and
adjustment process and identified elements behind the continuous prevalence of low level of
statutory minimum wages and MGNREGS wages. The paper argues that the existing procedure
of setting of minimum wages in India has failed to capture the realities of current consumption
ep
pattern and is one of the prime reasons behind the prevalence of low level of minimum wages.
The paper while appreciating significant reforms that have been introduced in the wage code
and wage rules (including the one relating to the extension of legal coverage of floor wage and
minimum wages to all wage earners) argues that the impact of these reforms would be limited
Pr
as reforms relating to setting and maintaining the level of minimum wages continues to be
based on the old framework and as the criteria for setting and revision of floor wages have not
even laid out in the wage rules. Similarly, in the context of MGNREGS wages, the paper found
that the wage rates under the programme are low and does not even match up with the
22
agricultural minimum wage rates in 20 out of 21 major states. Some the reasons identified for
the prevalence of low level of MGNREGS wages are attributed to the decision of delinking
ed
MGNREGS wages from that of the state agricultural minimum rate of wages in 2009;
subsequent fixation of MGNREGS basic wages devoid of any methodological backing and the
practice of adjustment of MGNREGS wages with outdated Consumer Price Index for
Agriculture Labour (CPI-AL). These limitations in wage policies coupled with implementation
issues are reflected in terms of the prevalence of the low level of statutory minimum wages and
iew
MGNREGA wages, thereby limiting these policies' very effectiveness in protecting income
and standard of living informal and migrant workers.
The precarious position of the informal and migrant workers in the labour market has
heightened the call for policy intervention to reset both the minimum wages and MGNREGS
wages at an adequate level paving the way for a human-centred and demand-led economic
v
recovery process. In this backdrop, the paper presents a case for strengthening India's wage
policies by providing an alternative framework for setting statutory floor wages and minimum
re
wages at an adequate level based on the recommendation of the Expert Committee (EC).
Similarly, in the context of MGNREGS, the paper provides four alternative approaches to set
and adjust MGNREGS wages and argues that each of these proposed approaches would be
better options than the existing approach of fixation and adjustment of wages under the
programme. er
In conclusion, the paper argues that the alternative framework by setting and maintaining
statutory wages and MGNREGS at an adequate level will not only make the redistributive
effect of wage policy much more robust in terms providing livelihood security to the low paid
informal and migrant workers but also in addressing poverty and inequality. This alternative
pe
and strengthened wage policy can also supplement and act as an essential component of the
fiscal policy tool under the ABA stimulus package to boost private consumption and to restore
aggregate demand, investment and promoting economic growth back to the pre-crisis levels.
ot
*************
tn
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23
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Econ. 63, 47–51 (2020). Available at: https://doi.org/10.1007/s41027-020-00255-0
Wolfson Paul (2019), A review of the consequences of the Indian minimum wage on Indian wages and
employment, ILO Asia- Pacific Working Paper Series, New Delhi, May 2019. Available at:
https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-
new_delhi/documents/publication/wcms_717971.pdf
v
World Bank (2020), COVID-19 to Add as Many as 150 Million Extreme Poor by 2021, Press Release,
October 7. Available at: https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-
add-as-many-as-150-million-extreme-poor-by-2021
re
er
pe
ot
tn
rin
ep
Pr
26
Appendix Table
ed
Appendix Table 1: Shortfall between notified MGNREGS wage rates and minimum
agricultural wage rates (in ₹ per day)
Latest notified minimum Shortfall of

MGNREGS wage
agricultural wage rates MGNREGS wages
iew
States rate effective from
from minimum
Wage Effective from April 1, 2020-21
agricultural wage
rates (year/month)
Karnataka 425 20-Apr 275 150
Kerala 410 17-May 291 119
Jharkhand 300 20-Oct 194 106
v
Punjab 361 20-Mar 263 98
Odisha 308 21-Oct 207 101
re
Gujarat 310 20-Oct 224 86
Bihar 279 20-Oct 194 85
Himachal Pradesh 275 20-Apr 198 77
Telangana 306 20-Apr
er 237 69
Assam 282 20-Jun 213 69
Chhattisgarh 257 20-Oct 190 67
Tamil Nadu 322 20-Apr 256 66
pe
Andhra Pradesh 292 20-Oct 237 55
West Bengal 260 21-Jan 204 56
Haryana 358 20-Jan 309 49
Uttarakhand 245 19-Sep 201 44
Maharashtra 276 20-Jul 238 38
ot
Madhya Pradesh 228 20-Oct 190 38

Jammu & Kashmir 225 17-Oct 204 21
Rajasthan 225 20-Aug 220 5
tn
Uttar Pradesh 201 20-May 201 0

Source: Compiled by the author from the state labour departments' latest notifications and in discussion with
state labour officials.
Note: (1) In Kerala, no inflationary adjustment of agricultural wages (₹ 410 per day) has taken place since May 2017. In fact,
in the state minimum wages are not linked to any price index for any scheduled employment. Further, latest wages in
rin
comparable schedule employments such as unskilled forestry (₹ 659 per day w.e.f. August 2019) or different types of the
plantation (₹ 304 per day in tea/coffee to ₹ 384 per day in rubber w.e.f January 2020) are either too high or low to consider as
a proxy for agricultural wages; (2) In Jammu and Kashmir, unskilled labourer minimum wages are applied to the agricultural
labourers. No inflationary adjustment of unskilled wages has taken place since October 2017; (3) In Gujarat, no inflationary
adjustment of agricultural wages (₹ 178 per day) has taken place since September 19 2016, unlike other minimum wage rates.
Therefore, latest unskilled labourer minimum wage rate for rural areas is taken as a proxy for agricultural wages; (4) In Tamil
ep
Nadu, no basic revision and inflationary adjustment of agricultural wages (₹ 146 per day) have taken place since January 30,
2015 (unlike other minimum wage rates). Therefore, latest plantation labourer minimum wage rate (₹ 322 per day) is taken as
a proxy for agricultural wages; (5) In Uttar Pradesh, the basic agricultural minimum wage rates gets revised in every two
years, but wages are not linked to a price index (unlike other minimum wage rates); therefore latest agricultural minimum
wages (₹ 201 per day) are low compared to other similarly placed states; (6) In Uttarakhand, the revision of basic agricultural
Pr
wages was last undertaken in July 2015, and the five-yearly revision which is due with effect from June 2020 has not been
undertaken yet. Hence, agricultural wage rates (₹ 245 per day) are low compared to similarly placed states.
27
Appendix Table 2: MGNREGS notified wage rates (in ₹ per day) from Financial Year 2006/07 to 2020-21
S.No. Name of State 2006-07 2007-08 2009-10
2010-11 &
2012 2013 2015 2016 2017
ed 2018 2019 2020
w
2011-12
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
1
2
3
Andhra Pradesh
Arunachal Pradesh
Assam
80
55-57
66
80
65-67
76.35
100
80
100
121
118
130
137
124
136
169
155
167
180
167
179
194
172
182
v e
197
i
177
183
205
177
189
211
192
193
237
205
213
e
4 Bihar 68 77 100 120 122 158 162 167 168 168 171 194
r
5 Chhattisgarh 62.63 62.63 100 122 132 157 159 167 172 174 176 190
6 Goa - - 110 138 158 195 208 229 240 254 254 280
7
8
Gujarat
Haryana
50
99.21
50
135
100
141.02
er
124
179
134
191
167
236
154-
178
251
162-
188
259
170-
192
277
179-
194
281
199
284
185-
224
309
198-
e
9 Himachal Pradesh 75 75 100 120-150 126-157 186
193 203 213 224 231 248
10 Jammu and Kashmir 70 70 100 121 131 157 164 173 179 186 189 204
11
12
Jharkhand
Karnataka
-
69
-
74
99
100
t p120
125
122
155
158
191
162
204
167
224
168
236
168
249
171
249
194
275
o
13 Kerala 125 125 125 150 164 212 229 240 258 271 271 291
14 Madhya Pradesh 63 85 100 122 132 157 159 167 172 174 176 190
15
16
17
Maharashtra
Manipur
Meghalaya
47
t
72.4
70
66-72
81.4
70 n 100
81.4
100
127
126
117
145
144
128
168
175
153
181
190
163
192
197
169
201
204
175
203
209
181
206
219
187
238
238
203
in
18 Mizoram 91 91 110 129 136 170 183 188 194 194 211 225
r
19 Nagaland 66 100 100 118 124 155 167 172 177 177 192 205
20 Odisha 55 70 90 125 126 164 174 174 176 182 188 207
21 Punjab
p 93-105 93-105 100-105 153 166 200 210 218 233 240 241 263
re
22 Rajasthan 73 73 100 119 133 163 173 181 192 192 199 220
23 Sikkim 85 85 100 118 124 155 167 172 177 177 192 205
24 Tamil Nadu 80 80 100 119 132 167 183 203 205 224 229 256
25
P Telangana - - - -
28
- - 180 194 197 205 211 237
26
27
Tripura
Uttar Pradesh
60
58
60
58
100
100
118
120
124
125
155
156
167
161
172
174
177
175
ed 177
175
192
182
205
201
28
29
Uttarakhand
West Bengal
73
69.4 69.4
73
100
100
130
120
136
125
169
156
174
161
176
174
180
Source: Compiled by the authors. Wage Rates from 2006/07 to 2010-11 were taken from Table 1.1 (page 7) as given in MGNREGA Sameeksha
191
i w
175
e
191
175
204
182
https://nrega.nic.in/Circular_Archive/archive/MGNREGA_SAMEEKSHA.pdf) and for the remaining years from the Gazette notifications (http://www.mgnrega.nic.in.)
201
e v
Note: (1) For 2006-7 and 2007-08, wages under MGNREGS were as per the agricultural labourers' wages fixed under the MWA, 1948; (2) From 1.1.2009 MGNREGS wages
were moved from Section 6 (2) to Section 6 (1) of the Act; (3) From 1.1.2011 MGNREGS wage rate was linked with Consumer Price Index for Agriculture Labour (CPI-AL);
r
(4) in the table, in the case of two wages, the wages are for different areas within the state, for example, non-scheduled areas with lower wages and schedule areas with higher
wages; (5) Union Territories have not been included; (6) From 2012 onwards MGNREGS wage rates are with effect from April 1 of every financial year.
Region 1 Region 2 Region 3 Region 4 Region 5
er
Appendix Table 3: Regions of India drawn based on a composite index for National Minimum Wages for regions
e
Odisha Andhra Pradesh Gujarat Delhi Arunachal Pradesh
Assam Telengana Karnataka Haryana Manipur
p
Bihar Chhattisgarh Kerala Himachal Meghalaya
Jharkhand Rajasthan Maharashtra Pradesh Nagaland
t
Madhya Jammu & Tamil Nadu Punjab Mizoram
Pradesh Kashmir Goa Tripura
o
Uttar Pradesh Uttarakhand Sikkim
West Bengal
n
Source: Report of the Expert Committee on Determining the Methodology for Fixing the National Minimum Wage (GOI 2019a)
in t
p r
r e
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Strengthening wage policies to protect incomes of the informal

and migrant workers in India

Guarantee Scheme (MGNREGS) in 2020-2021. The lockdown, which was announced on

2. Minimum wage fixation process and adequacy of minimum wage levels

Jammu & Kashmir

Andaman & Nicobar

Minimum Wage NFLMW

Source: Economic Survey, 2018-19

Minimum Wage (hereafter referred to as Expert Committee), we have provided an alternative

April 1 wages Wage With effect Semi- Highly

and adjust their basic agricultural minimum wages.

territories. For details please see: https://nrega.nic.in/Circular_Archive/archive/MGNREGA_SAMEEKSHA.pdf

which is taken up in the next section.

4.1 Alternative approach to set minimum wages at an adequate level

as income rises, even if absolute expenditure on food rises.

regions of the country as well.

fiscal measures even with a sunset constraint in a crisis.

Committee. also be fulfilled as it mandates ‘best option’ given that

wage payments and poor compliance to the statutory minimum wages.

Ministry of Labour and

Department, Government of India, New Delhi, August 8 2019,

Latest notified minimum Shortfall of

Madhya Pradesh 228 20-Oct 190 38

Uttar Pradesh 201 20-May 201 0

Region 1 Region 2 Region 3 Region 4 Region 5

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