Why is it in the news?
The Government is pondering upon a proposal to link the wages paid under MGNREGA scheme to an CPI-Rural, which will then be revised on an annual basis.
- The wages paid under the scheme are linked to the for agriculture work (CPI-AL).
- Concerns associated
- If we go by the basket of CPI-AL, then it gives over 72.94 % weightage to Food, Beverages and Tobacco.
- It has become obsolete as it has not been updated for at least three decades.
- This may result in understating the price pressures facing rural households.
- The wage hike has been declining in the last few years, for e.g. From a 5.7% hike in 2015-16 to 2.7% in 2017-18.
Significance of such reform
- In CPI-R 57.44% weightage is given to food and beverages (Tobacco).
- The remaining weightage is given to expenses incurred on education, transport, health.
- All in all, it captures the shifting consumption pattern and related price pressure in a holistic manner.