Why are the people in India ready to work for less than the minimum wages?
Answers
The National Rural Employment Guarantee Scheme (NREGS) guarantees 100 days of employment at the rate of Rs 60 a day. According to the website of the Union ministry of labour, the minimum wage is pegged at Rs 66 per day.
In dollar terms this comes to about $8.5 per week, assuming a six-day week. In America, the minimum wage is roughly $5.5 per hour before deduction of payroll taxes. Assuming a 40-hour week, this amounts to $220 a week.
The cost of living is much lower in India, the differences being adjusted through purchasing power parity (PPP). According to the World Bank, the rupee equivalent of a dollar can buy goods and services valued at about five times what a dollar can in America. Therefore a weekly wage of $8.5 in India is equivalent to $42.5 in America. Ceteris paribus, the minimum wage in America is five times higher than what it is in India.