Modi Government's Claim on Timely MGNREGA Payments False, Finds Study

According to the study, the Centre is under-calculating the compensation it owes to the workers for the delay in wage payment.

Speakers at the press meet in New Delhi. Credit: The Wire

Speakers at the press meet in New Delhi. Credit: The Wire

New Delhi: A new study has shown that the Narendra Modi government has released only 32% of the wages it owes to workers on time under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) during the first two quarters of the financial year of 2017-18. This is in contrast to the Ministry of Rural Development’s (MoRD’s) September claim that “around 85 per cent of the wages are being paid to the workers in time”.

The figures collated by an independent study that looked at 4.5 lakh MGNREGA transactions during the last two quarters also indicates that the government is violating the MGNREGA Act by under-calculating the compensation it owes to the workers for the delay in wage payment.

Importantly, the study, conducted by Rajendran Narayanan from the Azim Premji University in Bangalore in collaboration with two independent researchers highlights the growing fund crunch that the scheme is faced with, leading to “a crisis situation” as the MoRD “is running out of funds to pay wages and open new work for employment”.

Sharing the details of the study conducted in 3,603 gram panchayats across ten states at a press meet in New Delhi on December 1, Narayanan pointed out that contrary to the claims made by MoRD, “only 32% of the payments were credited within the 15 days of muster closure”. The Act mandates the payment of wages within 15 days of completion of the work week.

“Unlike before, this central government has centralised the payment system of the employment scheme. The state has no power to pay wages to the workers, even if it wants to. The Centre brought in the national electronic fund management system (Ne-FMS) as per which, on completion of the work week, a fund transfer order (FTO) is to be prepared at the block or panchayat level, basically an electronic pay order, and digitally transferred to the central government. Subsequently, the Centre would approve the FTO digitally and the payment will be transferred to the bank or postal account of the worker electronically. If this system would have really worked, nothing like it. However, the fact that only 32% of the payment has been paid on time to the workers shows it has not,” Narayanan said.

“What also needs to be pointed out along with the delay in the payment of wages is that the Centre has calculated the penalty to be paid to the workers for delay beyond 15 days only till the time the FTO is prepared. Say, if you work till December 1 and the FTO is prepared five days later, the worker will get compensation only for those five days of delay. However, the days of non-payment after the FTO is readied are not counted even if in many cases it runs to months. The Centre is not taking into account delay on its part. This is in violation of what the Act says,” he stated.

“Therefore, though the data of the panchayats we sampled in the study shows a total compensation of Rs 1.03 crore, in real terms, it should be Rs. 7.52 crore. The rate of under-calculation as of now stands at 86%.”

As per the Act, the government owes to the worker 0.05% of the wages earned per day for delay in wage payment. “It is a very small amount. Basically, it was brought in to ensure some kind of obligation on the Centre to pay the wages on time. For instance, if a worker is owed Rs 1000, it counts to just 50 paisa per day of delay,” explained Narayanan.

As per the study, “for the last two months, there has been an almost 100% pendency of all FTOs generated by the state governments at the ministry. No wages have been transferred to states like Kerala since 71 days, the first state to pilot the Ne-FMS system. Workers in six other states have not been for over a month.”

Speaking at the press meet, Nikhil Dey of the People’s Action for Employment (Guarantee) said, “As of today, M0RD is not paying wages to workers amounting to at least Rs 3,243 crore. This figure is likely to increase in coming times.”

Dey added that this delay in releasing payments is directly linked to the non-availability of funds.

“Even though the government keeps claiming that it has provided the highest ever funds to the scheme, the study points out that it has not. This group of independent researchers conducted a study of the same sample size this August which pointed out that in spite of repeated claims by the Union finance minister and the Union rural development minister of providing adequate funds to MGNREGA, only 20% of the funds budgeted for 2017-18 are left. In just four months, 80% of the funds allocated to the scheme have been utilised,” he said.

The Union Ministry of Finance (MoF) conducted an internal study for delay in MGNREGA payment following a news report that quoted the August study. Agreeing that the report was “accurate”, the report put together by Ayush Prasad, assistant secretary at the MoF’s Department of Expenditure, made a list of recommendations to better the payment system. Among those included a short-term credit limit (1-7 days) to the states from commercial banks to overcome the problem of non-availability of funds to make wage payments. According to this system, as soon as the FTO is generated, a message should be sent to the bank of the beneficiary worker to provide cash credit limit against the same amount. For example, if a worker is expecting to receive a payment of Rs 1200 from the wage list, then as soon as the FTO is generated, credit limit on his/her PM Jan Dhan Yojana Bank Account should be increased by 1,200 (at 0% interest) to meet immediate cash requirement. The actual payment of MGNREGA wages would exhaust this additional credit limit.

“Interestingly, after the recommendations were submitted, the government, instead of working on it, stopped payment altogether to some states on the plea that their audit reports have not been submitted. But my question is, why should the poor workers suffer because the state government has not submitted its report?” asked Dey.

Prashant Bhushan and Yogendra Yadav of Swaraj Abhiyan, who filed a public interest litigation in the Supreme Court in 2015 on the tardy implementation of the MGNREGA, also spoke at the press meet.

Bhushan said, “While the demand for allocation made by the states amounted to Rs 80,000 crore, the government has set aside only Rs 48,000 crore. If you take into account the arrears of wages to be paid from previous years, you can imagine how little has really been set aside for a programme that was brought in to address rural distress. This government is perhaps the most anti-farmer government in history. It is trying to slowly stifle a programme meant to ensure that at least 100 days of employment to the rural poor.”

Two MGNREGA workers belonging to NREGA Sangharsh Morcha – from Rajasthan and Uttar Pradesh – also addressed the reporters. Ram Beti, from the Sitapur district of UP, said, “The government, by employing delaying tactics, is not allowing us poor people to either die or live properly. Sometimes I think we were better off as bonded labourers. We have been demanding that the master roll created for our work be in Hindi so that we can check how many days of work is being shown against our names but it is yet to implement it.”

Dharamchand, from Kodra in south Rajasthan, pointed out that MGNREGA wages have been pending in his area since 2013. “Most of us have no other work option, so you will see many from Kodra migrating to Gujarat with which we share a border.”

The Supreme Court is scheduled to hear the ongoing case on MGNREGA implementation on December 5.