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Indian states with highest rural wages
Nov 20, 2013


Rural wage inflation has its pros and cons. Increase in rural wages results in better standard of living and eradicates poverty. However, at the same time, since rural labourers are mostly unskilled and are typically employed in manufacturing industry, rural wage inflation hurts the end user of the commodity in the form of increased prices. Overall, rural wage inflation is positive as it eradicates poverty and negative in one sense as it fuels inflation. Now, rural wages in India have increased by 16% between 2005 and 2012. Amongst all the states, Kerala has the highest rural wages at Rs 315 per person. Also, on a pan India basis, South India has highest wages compared to other parts of the country.

It is interesting to note that average wages in most states are higher than the one that are being paid under Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA). Since MNREGA sets base wage rate below which labourers do not work it has been blamed in the past for having inflated rural wages to a large extent. However, the fact that most rural wage rates are currently higher than prescribed by MNREGA suggests that there are other factors driving rural wage inflation. One factor could be infrastructure boom. This has led to significant demand in unskilled labourers thereby driving wage rates across states.

Source: National Sample Survey Organization & Live Mint
*AP= Arunachal Pradesh

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