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Source: This post on Aadhaar-Based Payment Systems (ABPS) for NREGA Wage Payments has been created based on the article “Aadhaar-based pay a bad idea for MGNREGS” published in “The Hindu” on 29th January 2024.
UPSC Syllabus Topic: GS Paper 2 Governance – Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Progress of Aadhaar-Based Payment Systems for NREGA Wage Payments, The article discusses the issues with using Aadhaar-Based Payment Systems (ABPS) in MGNREGS wage payments.
Background:
Recently, the Rural Development Ministry made Aadhaar-Based Payment Systems (ABPS) mandatory in the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
There are 2 modes of wage payments in MGNREGS: account-based and ABPS. As per the government’s data, out of 25.6 crore registered workers, only 16.9 crore workers are eligible for ABPS while all are eligible for account-based payments.
How are Payments Made Through ABPS?
For ABPS, the following procedure needs to be done:
First, a worker’s Aadhaar number must be linked to their job card. Authentication is successful only when all the details including spelling and gender match.
Second, Aadhaar must be linked to the bank account.
Third, the Aadhaar number of each worker must be mapped correctly through their bank branch with a software mapper of the National Payments Corporation of India.
The Aadhaar number acts as the financial address and cash transferred gets deposited to the last Aadhaar-linked bank account.
| What are the advantages of using ABPS, as claimed by the government? | What are the issues with these claims? |
| 1) Will remove duplicate job cards and lead to savings. | No publicly available audits on the procedures followed by officials in deleting job cards and the valid scientific assessment of the gains of such an exercise are available. Studies show how officials have resorted to deleting job cards owing to pressure from the Union government to meet 100% of the Aadhaar seeding targets. There are also strong evidence of exaggerated savings claims due to Aadhaar. |
| 2) Reduce wage payment delays. | Timely payments is only a function of the government allocating adequate funds. With adequate funds, the time taken to pay workers will not be different whether it uses ABPS or account-based payments. The evidence for quicker payments in ABPS compared to account-based payments was not statistically significant (only 3%). |
| 3) Lower payment rejections. | Study finds no statistically significant difference between the rejection rates in the two modes of payments. |
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What are Some Other Issues with Using ABPS in MGNREGS Payments?
- Lack of Evidence: No credible evidence supporting the decision to shift to ABPS was provided by the government.
- Complex Procedure: Incorrectness in any of the steps for ABPS means that the worker is denied work, does not receive wages, or is not paid in their preferred account.
- Spelling Mismatches: Since different administrative units are involved in creating different documents in rural areas, spelling mismatches are common.
Hence, according to the authors, the difficulties in resolving problems with ABPS are more than the difficulties in resolving problems with account-based payments and hence, account-based payments are advocated.
Question for practice:
What are the issues with using Aadhaar-Based Payment Systems (ABPS) in MGNREGS wage payments?
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