The long road to timely MGNREGA payments

News: There remain delays in the stage where the Central government transfers wages to the workers’ accounts.

There are wage payment delays under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

Eight crore MGNREGA wage transactions were pending on Diwali.

According to the People’s Action for Employment Guarantee (PAEG) findings, 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.

Also, there are pending arrears of ₹17,543 crore from previous years.

What are the reasons for the delayed payments of MGNREGA wages?

Insufficient funds: There is ample evidence by now, including an admission by the Ministry of Finance, that delays in wage payments are a consequence of insufficient funds.

Stage 2 delays: There are two stages in the wage payment process. a) 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. b) In Stage 2, the Central government then processes the invoices and transfers wages directly to the workers’ accounts. Stage 2 is the Central government’s responsibility that must be completed within seven days after Stage 1.

LibTech India, recently analysed 18 lakh invoices across 10 States from April to September in order to investigate Stage 2 delays.it was found that Stage 2 was completed only for 29% of the invoices within the mandated seven-day period.

There was also a steady increase in Stage 2 delays from July to September indicating depletion of funds.

How has central government responded so far?

Instead of ensuring sufficient funds for timely payments, the Central government has repeatedly tried to modify the payment architecture as if payment delays are an outcome of technological hurdles.

What are some other concerns/issues?

Violation of act: As per the Act, if Stage 1 plus Stage 2 exceeds 15 days, then workers are entitled to a delay compensation for each day’s delay. However, in violation of the Act and the Supreme Court’s orders, no delay compensation for Stage 2 is even being calculated.

Caste-based segregation of Invoices: Earlier, the invoices were not segregated by caste. On March 2, the Central government issued a circular to segregate invoices based on the caste of workers (Scheduled Castes, Scheduled Tribes, and ‘Others’).

Caste-based segregation has also resulted in tensions at worksites. It had also resulted in a threefold increase of workload for computer operators at blocks.

However, after critical media reportage, the Central government, has revoked the caste-based segregation of wage payments.

Issues in Payments platform: Shifting to Aadhaar Payment Bridge Systems (APBS) from traditional account-based payments has complicated problems. Misdirected payments and payment failures, are being caused due to erroneous Aadhaar mapping with the payment software.

These problems are difficult to resolve even for bank and block officials resulting in increased hardships for workers.

What is the way forward?

At least ₹50,000 crore needs to be allocated urgently and the Central government, in compliance with Supreme Court orders, must automatically calculate and pay the workers their entitled delay compensation.

To secure the payment systems there is a need for an impartial, independent assessment and audit of the payment systems.

Source: This post is based on the article “The long road to timely MGNREGA payments” published on 8th November 2021 in The Hindu