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Payments issue with MGNREGA

  • IASbaba
  • November 9, 2021
  • 0
UPSC Articles
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GOVERNANCE/ ECONOMY

  • GS-2: Government policies and interventions for development in various sectors
  • GS-3: Indian Economy and issues relating to planning, mobilization, of resources

Payments issue with MGNREGA

Context: Eight crore MGNREGA wage transactions were pending on Diwali.

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. 
  • The Central government then processes the invoices and transfers wages directly to the workers’ accounts. This is called Stage 2 and is the Central government’s responsibility that must be completed within seven days after Stage 1.
  • 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.

Payment issues with MGNREGA

  • Pending arrears of ₹17,543 crore from previous years.
  • Delay compensation for Stage 2 is not even being calculated.
  • Stage 2 was completed only for 29% of the invoices within the mandated seven-day period. 
  • In fact, for nearly two-thirds of the transactions in Jharkhand and more than half the transactions in Chhattisgarh, Madhya Pradesh and West Bengal, Stage 2 exceeded 15 days.
  • There delays in wage payments are a consequence of insufficient funds. Funds allocation this financial year (FY) is 34% lower than the revised budget allocation of last year.
  • Instead of ensuring sufficient funds for timely payments, the Central government has repeatedly altered with the payment architecture. Recently, the Central government issued a circular to segregate invoices based on the caste of workers (SC, ST and others).
    • Central government has justified caste based segregation on grounds that it enables proper accountability of benefits flowing to SC/ST households.
  • There were significant variations in delays by caste. 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.
  • Caste-based segregation in payments has also resulted in tensions at worksites. It had also resulted in a threefold increase of workload for computer operators at blocks.
  • No difference in the time taken for payments through the Aadhaar Payment Bridge Systems (APBS) and traditional account-based payments. 
  • In fact, APBS has given rise to complicated problems like misdirected payments and payment failures due to wrong Aadhaar mapping with the payment software.

Conclusion

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.

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