The long road to timely MGNREGA payments

The long road to timely MGNREGA payments

Issues with the MGNREGS

Source: The Hindu

Context: The author highlights several issues with the MGNREGS.

Problems with the MGNREGS:

Lower allocation in ratio of GDP: The Finance Minister allocated 73,000 crore for the scheme in this year's Budget, which was higher than the previous year's absolute number in Budget allocations, but this amounted to only 2.1 percent of Budget expenditure, the lowest outlay in those terms in the last six years.

No money left in MGNREGA coffers: as many as 21 of 35 States/UTs have utilised over 100% of their allocated funds under the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) for FY2021-22.

Despite an increase in allocation last year: To meet the demand for work, MGNREGS allocations were increased by 50,000 crore the previous year, with the Revised Estimates for spending on the scheme increasing to 1,11,500 crore.

Right to work denied: Civil society activists claim that officials have turned away some workers despite a high demand for work due to a lack of funds.

Delays in payments: On Diwali, there were eight crore MGNREGA wage transactions pending. The People's Action for Employment Guarantee (PAEG) recently published a tracker that includes key metrics on MGNREGA implementation. It revealed that the funds allocated this fiscal year (FY) are 34% lower than the revised budget allocation of last year. And the funds for this year have been depleted.

Caste-based segregations: While 46 percent of payments to SC workers and 37 percent of payments to ST workers were completed within the required seven-day period, only 26 percent of payments to non-SC/ST workers were completed within the required seven-day period. Caste-based segregation had a particularly negative impact in poorer states such as Madhya Pradesh, Jharkhand, Odisha, and West Bengal.

Social Tension: Denial of payment has caused social friction in Ajmer, Rajasthan because some communities receive the money earlier than others.

The decline in Rural consumption: Delays in wage payments could also lead to a drop in rural spending, which is critical for economic growth.

Adhaar Payment Bridge System (APBS) has given rise to a litany of complicated problems like misdirected payments and payment failures due to erroneous Aadhaar mapping with the payment software.

Misdirected payments happen when one person’s Aadhaar gets linked to somebody else’s bank account. . Even for bank and block authorities, these issues are difficult to address, resulting in greater hardship for workers. These are the bare minimum requirements for an unbiased, independent review and audit of the payment systems.

Explicitly describing the payment procedure: The wage payment process is divided into two sections.

1. In Stage 1, States must electronically send invoices, also called 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.
2. Stage 2: The Central government then processes the invoices and transfers wages directly to the workers’ accounts. It is the central government’s responsibility that must be completed within seven days after Stage 1.

Various Provisions: 

Stage 1 delays have decreased since Supreme Court directives in 2018, while Stage 2 delays have persisted.

According to the Act, if the sum of Stages 1 and 2 exceeds 15 days, workers are entitled to delay compensation for each day of delay.

However, in violation of the Act and the Supreme Court's orders, no Stage 2 delay compensation is being calculated. Instead of ensuring adequate funds for timely payments, the Central Government has repeatedly tinkered with the payment architecture, as if payment delays were a result of technological challenges.

Importance of MGNREGS:

• Acts as an effective substitute in the absence of crop and weather insurance in aiding poor farm households.
• Helping to provide wages during agrarian crises,
• It is an avenue for employment during the economic crisis induced by the pandemic and the response,
• MGNREGS has turned out to be a salve for farmworkers and laboures.
• Rural development: It also has the potential, if works are upgraded suitably, to continue to improve rural development and infrastructure.

The way forward: The Central Government's payment delay has caused a slew of problems. In times of pandemic-induced economic distress, these must be addressed as soon as possible.