Worried at the prospect of having to match the arbitrary minimum wage rate fixed by the states, the central government is considering changes in the law to specify a separate wage norms for its flagship rural employment guarantee scheme that is undergoing a complete makeover under minister Jairam Ramesh.
The centre has already contested in the Supreme Court a Karnataka High Court interim order directing it to align wage rates under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) with the minimum wages in the state.
It now wants to legislate a standalone wage regime for the scheme under the Minimum Wages Act, 1948, worried that states may otherwise arbitrarily increase minimum wages, leaving the centre to foot the bill.
The financial implication of Karnataka order that applies to payments for works since September 2011 is about Rs 300 crore.
"We are preparing a cabinet note and we will go to the cabinet for amending the existing act. This will give NREGA wage rate statutory validation and the centre will have the right to revise it," minister for rural development Jairam Ramesh told ET.
The constitutional amendment to the Act will legally establish the MGNREGA wage rate as an independent wage rate delinked from the minimum rate fixed by the states.
There are six states as of now that have minimum wages that are higher than the rate prescribed for NREGA works. If the Karnataka ruling were to apply to all of them the government would have to shell out Rs 900 crore more.