MGNREGA was safety net for workers during first wave, but there are holes in it now

Relevance – MGNREGA is one of the most famous and biggest employment programs. Any issue in this program can affect millions of lives.

Synopsis: There are issues in the disbursement of MGNREGA wages.

Background

• The MGNREGA, among other social security programmes, can be a powerful safety net for the poor. For instance, it acted as a shock absorber during the first wave of the pandemic.
• The effective functioning of MGNREGA depends upon sufficient budget allocation, reliable payment systems, and ease of access to wages.
• Yet, the Government reduced the MGNREGA budget this year and neglected it in subsequent relief measures post the second wave.

Issues in the disbursement of MGNREGA wages

First, delays in the disbursement of Wages: As per the Act, workers should get wages within 15 days of completion of work failing which they are entitled to compensation for delays. The MGNREGA payment process consists of two stages.

• First Stage: After work is completed, a Funds’ Transfer Order (FTO) with worker details is digitally sent to the GoI by the panchayat/block.
• Second Stage: The GoI then processes the FTOs and transfers wages directly to the workers’ accounts.

• • The Act’s guidelines say that the first stage must be completed in eight days, and the second within seven days after Stage 1.
  • However, as per official data, only 26 percent of the transactions of the first quarter of this financial year were credited within the stipulated seven-day period.
  • In 2018, the Supreme Court gave strong orders reprimanding the GoI for not paying compensation for the delay it was causing.
  • Three years hence, the GoI continues to violate the Act and court orders.

Second, MGNREGA has been a laboratory of many experiments since 2012.

• Until recently, every MGNREGA FTO consisted of multiple transactions of workers across caste categories.
• On March 2, the GoI issued a circular to change the payment system so that payments can be made separately based on the caste of workers (SC, ST, and “Others”). Its purpose was to assess, how much the SC/ST communities benefited from MGNREGA.
• While affirmative action is important, experimenting with the payment architecture without transparent discussions or a justified rationale is uncalled-for.
• While the purpose of knowing the amount of money accrued to SC/ST households is useful, it can easily be calculated after the wage payments are completed.

Way forward

A robust mechanism is required for feedback from workers to evaluate the robustness of these systems. Further, India boasts 4,355 crore digital retail transactions in 2020-21 as per RBI data. These transactions usually take minutes to complete or a day in normal circumstances. In comparison, MGNREGA transactions, which are only 1.6 percent of the volume of these, get routinely delayed. These issues can only be addressed with strong political will.