reforms-in-mgnrega

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.

Background

  1. The wages paid under the scheme are linked to the for agriculture work (CPI-AL).
  2. Concerns associated
    1. If we go by the basket of CPI-AL, then it  gives over 72.94 % weightage to Food, Beverages and Tobacco.
    2. 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

  1. In CPI-R 57.44% weightage is given to food and beverages (Tobacco).
  2. The remaining weightage is given to expenses incurred on education, transport, health.
  3. All in all, it captures the shifting consumption pattern and related price pressure in a holistic manner.