[Editorial Analysis] The long road to timely MGNREGA payments

Mains Paper 3: Economy
Prelims level: Mahatma Gandhi Rural Employment Guarantee Scheme
Mains level: Problems with the Mahatma Gandhi Rural Employment Guarantee Scheme


• 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.

Problems with the MGNREGS:

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

• This is despite increased allocation last year: In the previous year, the allocations for MGNREGS were increased by ₹50,000 crore to meet the demand for work, with the Revised Estimates for spending for the scheme going up to ₹1,11,500 crore.

• Delays in payments: Eight crore MGNREGA wage transactions were pending on Diwali. The People’s Action for Employment Guarantee (PAEG) recently released a tracker with important metrics on MGNREGA implementation. It showed that funds allocation this financial year (FY) is 34% lower than the revised budget allocation of last year. And this year’s funds have been exhausted. This is despite the MGNREGA ensures employment guarantee.

• Right to work denied: Civil society activists claim that some workers have been turned away by officials despite the demand for work because of the paucity of funds.

• Caste based segregations: 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 Tension: In Rajasthan’s Ajmer, denial of payment has led to social tension as few communities receive payment earlier than others.

• Decline in Rural consumption: Delays in wage payments could also result in a decline in rural consumption, which plays a vital role in stimulating the economy.

• 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. These problems are difficult to resolve even for bank and block officials resulting in increased hardships for workers. These minimally warrant an impartial, independent assessment and audit of the payment systems.

Explaining the Payment process:

There are two stages in the wage payment process.

• 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.

• 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:

• Since Supreme Court orders in 2018, Stage 1 delays have reduced while Stage 2 delays continue.

• 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. Instead of ensuring sufficient funds for timely payments, the Central government has repeatedly tinkered with the payment architecture as if payment delays are an artefact of technological hurdles.

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 farm workers and labourers.

• Rural development: It also has the potential, if works are upgraded suitably, to continue to improve rural development and infrastructure.

Way forward:

• The delay in the payments by the Central government has created a host of issues. These must be addressed as soon as possible in the times of pandemic induced economic distress.


Prelims Questions:

Q.1) With reference to the Fit India Plog Run, consider the following statements:

1. It is an annual nationwide event organised as part of the Fit India Movement.

2. Plogging is a unique activity that combines fitness and cleanliness – Swaachta and Swasth – in which participants collect litter while jogging.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C

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