The Long Road To Timely MGNREGA Payments
Context: Delays in transfer of MGNREGA wages is causing distress among workers and need to be addressed.
Stages in the MGNREGA wage payment process
- Stage 1: States electronically send invoices (FTOs), to the Central government within eight days of completion of work at a worksite.
- These invoices contain essential worker details like their names and bank account numbers.
- Stage 2: Central government processes the FTOs invoices and transfers wages directly to the workers’ accounts.
- Stage 2 must be completed within seven days after Stage 1.
Issues associated with MGNREGA payments
- Delays in payments: 8 crore MGNREGA wage transactions were pending on Diwali (4 November 2021). According to report ‘Heavy Wait’ by LibTech India-
- Stage 2 payment was completed only for 29% of invoices within mandated seven-day period.
- Stage 2 payments exceeded 15 days for nearly two-thirds of the transactions in Jharkhand and more than half the transactions in Chhattisgarh, Madhya Pradesh and West Bengal.
- Steady increase in Stage 2 payments delays from July to September indicating depletion of funds.
- Violation of MGNREGA Act and Supreme Court’s orders: i.e. if payment delays exceeds 15 days, then workers are entitled to a delay compensation for each day’s delay.
- But, no delay compensation for Stage 2 is even being calculated.
- Inadequate allocation of funds by central government: People’s Action for Employment Guarantee (PAEG) showed that funds allocation for this financial year (FY) is 34% lower than the revised budget allocation of last year.
- And this year’s funds have been exhausted.
- Caste-based segregation of wage payments: While 46% of payments to SC workers and 37% for ST workers were completed in the mandated seven-day period, it was a dismal 26% for non-SC/ST workers.
- The negative impact of caste-based segregation was felt acutely in poorer States such as Madhya Pradesh, Jharkhand, Odisha and West Bengal.
- Social tensions: Caste-based segregation has a resulted in tensions at worksites and threefold increase of workload for computer operators at blocks.
- Technological hurdles – Misdirected payments and payment failures: Due to erroneous Aadhaar mapping with payment software when one’s Aadhaar gets linked to somebody else’s bank account.
- Excessive reliance on technology: Pushing APBS, despite the fact that there is no difference in time taken for payments through Aadhaar Payment Bridge Systems (APBS) and traditional account-based payments.
- Technical problems are difficult to resolve even for bank and block officials resulting in increased hardships for workers.
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Accountability issues: Instead of ensuring sufficient funds for timely payments and strengthening accountability checks such as social audit, the Central government has repeatedly tinkered with the payment architecture.
Way forward:
- Better accounting process like mapping of earnings of SC/ST households after the wages were paid.
- Accountable payment system: Impartial, independent assessment and audit of the payment system.
- Adequate allocation of fund without delay in wage payment: As Official data show that the work demand will remain same. So, at least Rs 50,000 crore needs to be allocated urgently.
- Compensation payment: Central government must automatically calculate and pay workers their entitled delay compensation.
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