Lack of Funding in MGNREGA

Syllabus: General Studies Paper 2

Context:

Recently, the Centre has decided to scrap the system of caste-based wage payments in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme after complaints from State Governments.

• Earlier, the Central government had introduced a category-wise (SC, ST and others) wage payment system, for better accounting purposes.
• No doubt, knowing the earnings of SC/ST households is useful. But it could have been done after the wages were paid.
• Eight crore MGNREGA wage transactions were pending on Diwali.

Issues:

• Negative impact of caste-based segregation: 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. 
  • In addition to such stark differences, in West Bengal, the Central government kept pending nearly 45% of the wages beyond 15 days as on October 13.
• 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. 
  • After critical media reportage, the Central government has revoked the caste-based segregation of wage payments. 
  • However, the Central government has not assumed any accountability by paying compensation for delays despite the evident damage caused by caste-based segregation of payments.
• Lack of funds: The Ministry of Rural Development said that currently Rs.8921 crore funds are available which can meet the wage liability. 
  • This statement is misleading as the Ministry has not accounted for pending arrears of ₹17,543 crore from previous years. 
  • There is ample evidence by now that delays in wage payments are a consequence of insufficient funds. 
  • 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. 
  • The Chief Ministers of Odisha and Tamil Nadu wrote to the Prime Minister seeking additional funds for MGNREGA.
• No advantage of technology: according to a report, there is any 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 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. 
• Wage payment process of MGNREGA
  • 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. This is the Central government’s responsibility that must be completed within seven days after Stage 1. 
  • Since Supreme Court orders in 2018, Stage 1 delays have been 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 modified the payment architecture as if payment delays are due to technological hurdles. 
  • Earlier, the invoices were not segregated by caste. Recently, the Central government issued a circular to segregate invoices based on the caste of workers (Scheduled Castes, Scheduled Tribes, and ‘Others’). It was then taken back.
• Delay in Stage 2: In our sample, Stage 2 was completed only for 29% of the invoices within the mandated seven-day period. 
  • For 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 was also a steady increase in Stage 2 delays from July to September indicating depletion of funds. 

These minimally warrant an impartial, independent assessment and audit of the payment systems. Technical fixes cannot be substitutes for political will. Official data show that the work demand this year is similar to that of last year. As such, 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.

The Hindu Link:

https://www.thehindu.com/opinion/op-ed/the-long-road-to-timely-mgnrega-payments/article37372082.ece

Question- Describe various issues pertaining to the functioning of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.