Minimum Wage in India: A Comprehensive Guide

27 of December, 2022

Minimum wage in India are determined at the state level and are set for different categories of workers. Employers must pay their workers the minimum wage as the lowest remuneration for their work.

We will explore in this blog article the impact, history, current status and regional variations of minimum wages in India. Knowing that will allow you to manage payrolls easily.

Overview of Minimum Wages in India

Measuring the standard of living and the level of economic development in India requires determining the minimum wage.

The current minimum wage rate for workers in India is set at ₹176 per day or ₹4,576 per month. This rate applies to all workers, regardless of the occupation or sector that they are employed in.

The Indian government has been steadily increasing the minimum wage in the country over the past few years. India has done this to keep pace with the increasing cost of living and to ensure that workers can make ends meet.

The government considers the purchasing power of the Indian rupee. Alonside with the cost of food, housing, and other necessities when determining the minimum wage rate.

It is important to note that the wage doesn’t affect any other areas of a contract. Meaning that a worker should have the right to vacations, compensation, etc.

History and Current Status of Minimum Wages in India

The concept of minimum wages was first introduced in India in the year 1948 when the Minimum Wages Act was enacted. It mandated that all states in India must set a minimum wage rate for workers that would be applicable in their respective states.

Since then, there has been a steady increase in the minimum wage rate in India. The Indian government has also set up a Minimum Wages Advisory Board (MWAB). The board ensures that employers are implementing the minimum wage rate properly and paying their workers the prescribed minimum wage rate.

The government tasks the MWAB with making recommendations regarding any changes necessary to ensure proper implementation of the minimum wage rate.

Even more changes could arise with the implementation of the New Labour Code. 

Regional Variations in Minimum Wages in India

It is important to note that the minimum wage rate in India is not the same across the country. The Indian government has set different minimum wage rates for different states in the country based on the cost of living in each state.

Many factors can attribute these regional variations in the minimum wage rate.It can be the cost of food, housing, and other necessities in each state.

For example, the minimum wage rate in Delhi is set at ₹504 per day or ₹12,624 per month. This is higher than the national minimum wage rate of ₹176 per day, or ₹4,576 per month.

Similarly, the minimum wage rate in Himachal Pradesh is set at ₹325 per day or ₹8,400 per month.

Impact of Minimum Wages on Businesses and Workers

The implementation of minimum wages in India has had a positive impact on both businesses and workers. Businesses have benefited from the minimum wage as well.

This because it has increased the purchasing power of workers, thereby boosting demand for goods and services. This has in turn led to increased profits for businesses.

Workers have also benefited from the implementation of minimum wages. It has ensured that they are receiving a fair wage for the work they are performing. This has enabled them to make ends meet and has improved their standard of living.

The implementation of minimum wages in India has also had a positive impact on the overall economy. The increase in purchasing power has led to an increase in demand, which has in turn led to an increase in economic activity and growth.

It also helps to reduce the attrition rate in several industries and commercial segments.

Average Wage in India

The average wage in India is set at ₹305 per day or ₹7,650 per month. This is higher than the national minimum wage rate of ₹176 per day, or ₹4,576 per month.

Taking into consideration the wages of all workers in the country, regardless of their occupation or sector, determines the average wage in India.

Taking into consideration the cost of living in each state and the wages of workers in that state, somebody determines the average wage in each state. This ensures that workers in each state are receiving a fair wage for the work they are performing.

Which Indian States Have the Lowest Minimum Wages?

The Indian government has set different minimum wage rates for different states in the country based on the cost of living in each state.

The states which have the lowest minimum wages are Assam, Bihar, and Chhattisgarh, where the minimum wage rate is set at ₹150 per day, or ₹3,750 per month.

It is important to note that the Indian government is constantly monitoring the cost of living in each state and making adjustments to the minimum wage rate accordingly. This ensures that workers in all states are receiving a fair wage for the work they are performing.

Conclusion

We explored the impact of minimum wages in India, its history and current status, regional variations, and more. We also discussed the impact of minimum wages on businesses and workers.

The implementation of minimum wages in India has had a positive impact on both businesses and workers. The increase in purchasing power has led to an increase in demand, which has in turn led to an increase in economic activity and growth.

The Indian government is constantly monitoring the cost of living in each state and making adjustments to the minimum wage rate accordingly to ensure that workers in all states are receiving a fair wage for the work they are performing.

If you have to manage to manage any wage at all in your company in India, you should definitely try Sesame‘s payroll solution. It will make it very much easier for you to deal with salary payments and deductions.