Sitharaman responds to Chidambaram on Rs 400 minimum wage: 'States empowered to fix rates, difficult for Centre to...'

Finance Minister Nirmala Sitharaman on Wednesday responded to former Finance Minister P Chidambaram, who during his recent speech raised a host of issues such as minimum wages and the Agnipath scheme. Chidambaram, during his speech on the Budget 2024, suggested the government scrap the Agniveer scheme and also fix the minimum wage for labourers at Rs 400. 

Addressing the minimum wage issue, the Finance Minister said the issue was complex as the Minimum Wage Act of 1948 also empowers the states to fix the minimum rates. She also said that even the MGNREGA Act 2005, brought in by the UPA, does not have a uniform wage rate for labourers.   

"The Rural Development Ministry, which deals with MGNREGA, has been declaring the minimum wage based on CPI-AL (Consumer Price Index - Agricultural Labour). The CPI-AL reflects inflation in rural areas. This has been the practice since 2005 till 2014. Our government also followed the same. What prevented the UPA from notifying a uniform wage rate under the MGNREGA Act," she asked.

Sitharaman then highlighted the complexity and nuances of the Wage Act. "The Minimum Wage Act 1948 also empowers the states to fix minimum wage with respect to various categories of employment. In the states, minimum wages are fixed differently."  

For instance, she said, Karnataka notifies four different zones to fix minimum wages for unskilled workers. In Himachal Pradesh, as per the state notification which was issued in May 2023, an unskilled person would get Rs 375.

"So if wages are to be fixed by different states and for different zones even within the states, it is difficult to think of how the central government can fix a wage at Rs 400, and also say it should be done for the entire country," she said. 

Agnipath scheme

The Finance Minister also defended the Agnipath scheme, saying it was brought in to keep India's armed forces young and battle-ready. She said Chidambaram has also served as Home Minister and he understands the nuances involved in the national security. "Agniveer is a very reformative step to enhance the capabilities and battle-readiness of our armed forces. It ensures we have fit soldiers who are on the frontline," she said. 

"One of the expected outcomes of this scheme is that the armed forces will have much younger folks by recruiting those in the age group of 17.5 to 21 years years and retaining only 25 per cent, thus reducing the average age of soldiers," the minister said, adding that in the US and UK, soldiers are required to render only 2 of the 6 years in service because these country want to keep the young, fit, and agile person at the borders.

"I hope on matters related to the fitness and battle readiness of the Indian forces, we don't do politics. Because it is going to be critical for this country. we need young and battle-ready people," the finance minister stated. 

Sitharaman also highlighted how the state of the military was in 2014 when the UPA was voted out of power after 10 years. "In 2014, when Prime Minister Narendra Modi reviewed the situation, the army did not have bullet-proof vests. we had to panic-buy and get them. Today, in our country, we produce bullet-proof vests which are good enough for the army. And it has given them a sense of security."

"Not just bullet-proof vests, at that time, major defence procurements did not happen. In the House, the then-defence minister said - 'we can't procure because we don't have the money'. Agniveer is a scheme which we brought in with a great sense of commitment to keep our armed forces battle-ready," she said.