Revised MGNREGA wages and inflation

The Indian government is planning to increase minimum wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) by between 17 percent and 30 percent from the current IRs 100 a day. It will cost the government an additional IRs 3,500 crore (total budget allocation for this fiscal year is IRs 40,100 crore) in the current fiscal year itself. Good for the workers, but bad for local employers who employ low-skilled laborers, and for food prices and inflation. NREGA (renamed MGNREGA in  FY 2010/11) is a flagship rural employment generation and livelihood program of the UPA government in India. This social welfare program guarantees one hundred days of employment per year at the prevailing minimum wage rate for unskilled labor. When NREGA was implemented in 2006, eleven states saw a rise in minimum wages. The new revised wages, to be adjusted with CPI, is set to increase wages in twenty states.

Earlier, the per day wages was set at IRs 100. The estimates below are based on IRs 100 per day wage. With budget amounting to mere 0.67 percent of GDP, the program provided employment to 53 million households and created around two million productive assets in fiscal year 2009-2010 (see Table 1 and 2). Meanwhile, employment given to women accounts for around 48 percent of the total persondays of employment. Similarly, employment given to backward groups (scheduled tribes and scheduled castes)—also the most vulnerable groups to income and climate related shocks—account for about 51 percent of the total persondays of employment created in fiscal year 2009-2010.

 

Table 1: NREGA budget
Fiscal year	2006-07	2007-08	2008-09*	2009-10**
Number of rural districts	200	330	615	615
NREGA/GDP	0.27	0.25	0.56	0.67
NREGA/Expenditure	1.94	1.68	3.33	3.83
NREGA/Revenue	2.60	2.21	5.34	6.36
Sources: Computed using data from Union Budgets, Economic Surveys and NREGA website; **budget estimate; *revised budget estimate

 

 

Table 2: Employment under NREGA (million)
Fiscal year	2006-07	2007-08	2008-09	2009-10
Households provided employment	21	34	45	53
Total persondays	905	1437	2163	2826
SCs persondays	230	394	634	863
STs persondays	330	421	550	586
Women persondays	368	611	1036	1374
Others persondays	346	622	980	1377

Private inspection and trade facilitation

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Private inspection of international shipments has been used over the last half-century for a variety of purposes. These include prevention of capital flight and improvement of import duty collection, among others. The existing literature has failed to find much impact of these inspection programs on collected tariff revenue or corruption at the border. This paper explores the "facilitation" effect of private inspection programs on trade. The results indicate that private inspection has a positive and significant trade-facilitation effect. These programs raise import volumes for countries using them by approximately 2 to 10 percent. The findings here also suggest that the benefit of private inspection of imports may be associated with reforms and best practices applied by private inspection firms. Private firms' inspection of cargo may promote faster clearance times and process reliability, rather than improved tax collection.

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Full paper here. So they Vela, Aadot, and Wilson (2010) find that private inspection of international shipments positively and significantly affect trade facilitation, with a rise in import volumes for countries using them by approx 2-10 percent.