Excessive Centralisation by Modi Government is Undermining MNREGA

By centralising the control of funds, using technology excessively and fixing asset creation targets, the Centre has effectively taken ownership of the scheme away from gram panchayats and workers in Jharkhand.

Women working at an MNREGA site. Credit: UN Women/Gaganjit Singh/Flickr CC BY-NC-ND 2.0

Women working at an MNREGA site. Credit: UN Women/Gaganjit Singh/Flickr CC BY-NC-ND 2.0

Gram panchayats do not have any control over MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) funds and cannot implement schemes to respond to the demand for work. The implementation of the programme is completely controlled by the block administration, based on orders from the top,” said a gram panchayat president from the Dumka district in Jharkhand at a recent meeting, expressing his anguish. The same sentiment was echoed by all other gram panchayat presidents present at the meeting, asserting that gram panchayats could not provide work to people for the period between August-October 2016 because the local administration failed to sanction schemes on time. In Jharkhand, the scale of work during this period was the lowest in the last five years.

Even though gram panchayats are primarily responsible for implementing projects sanctioned under the MNREGA, evidence from Jharkhand suggests that these local bodies are not able to respond to the demand for work as implementation of the programme is increasingly becoming centralised. The panchayat presidents present at the meeting were not even aware that it took only a few WhatsApp messages, supported by the rationing of funds from the Ministry of Rural Development (MoRD) to the state’s department of rural development to curb the generation of employment in their respective gram panchayats. The MNREGA is now run on the diktats of the central government and not on the needs of rural workers, as the legislation had envisaged.

There is also a growing tendency in the MoRD to introduce technologies for the programme’s implementation that make the process more centralised. The excessive dependence on technology is also making MNREGA unnecessarily complex and opaque, for both gram panchayats and workers. For workers to claim their entitlements and for the gram panchayats to respond to the demand for work, the implementation of the programme needs to be adequately simple and decentralised.

Based on evidence from Jharkhand, there are three clear examples of how excessive centralisation and dependence on technology are undermining the MNREGA, thereby rendering the legislation nearly redundant.

Centralisation of control over funds

Till 2012, agencies responsible for the implementation of the MNREGA (primarily, gram panchayats) used to get funds in their bank accounts for meeting the labour, material and other costs incurred on the execution of projects sanctioned under the Act. However, the MoRD has since then gradually shifted to a real-time transaction based ‘electronic fund management system’ (EFMS), wherein funds are transferred electronically to the account of the worker or material vendor from a central bank (which was earlier at the district level, then shifted to the state level and is now being shifted to the national level for all states).

The EFMS was expected to help implementing agencies in pulling the funds directly from the central bank based on demand for work rather than wait for periodic release of funds from the state government. For this system of centralised management of funds to work smoothly, there should be no shortage of funds in the central account and the gram panchayats should have the autonomy to initiate works.

The capping of MNREGA funds by the central government since 2014-15 has been widely discussed. This year, after the employment generated between April and July reached 132% of the labour budget “approved” for these four months, the MoRD started rationing the release of funds and told states through informal means of communication that the ‘mad race’ for generating employment had to stop. As a result, employment through MNREGA began plummeting from August onwards.

Ground reports from Jharkhand suggest that centralisation of fund has weakened the control of gram panchayats on implementing schemes to respond to the demand for work. Despite demand for the generation of work suitable in the rainy season (like animal shed building, land levelling and bunding) during August-October 2016, most gram panchayats were unable to implement schemes as they were not sanctioned in time by the block administration. The visible lack of pro-activeness in local administration to sanction schemes suggests that MoRD’s informal communication on controlling the generation of employment had its desired effect on the local bureaucracy. In the words of a gram panchayat president of Dumka district, “MNREGA thapp ho gaya hai peechhle teen mahino se (MNREGA has crashed in the last three months)”.

The central and state governments have also started using the EFMS to control the MNREGA expenditure on the sly. The electronic system has made it possible for the central and state governments to control expenditure that can be made by gram panchayats. From May 2016 onwards, the central government, without issuing any formal order, blocked the options in the EFMS for making payments to vendors supplying material for MNREGA, in order to ration the limited budget. Even after the ministry removed this restriction, the state government continued to disallow material payments, causing disruptions in the construction of assets such as wells and animal sheds. Before the introduction of the EFMS, it was not possible for the state government to restrict the use of MNREGA funds that had been transferred to the accounts of the gram panchayats.

While it is true that centralisation of funds has helped in addressing the issue of unspent MNREGA funds lying in the accounts of gram panchayats across the country, this has happened at the cost of gram panchayats losing control over these funds to respond to the demand for work and assets.

Excessive dependence on technology

All the processes related to the allocation of work and payment to workers under the MNREGA are digitised and executed in real-time through the EFMS. It was expected that the EFMS would reduce the delays in payment of wages to workers. But a random visit to villages in Jharkhand makes it amply clear that workers still remain uncertain about how long it will take to get their wages after a week’s work.

For ensuring wage payments on time, various institutions such as gram panchayats, the local administration and banks have to work together to perform a number of successive internet-based tasks within a span of 15 days. For a state like Jharkhand that has poor digital infrastructure and internet connectivity, and does not have an adequate number of trained functionaries, timely payment of wages through the EFMS remains a major challenge.

In Jharkhand, the final approval for payment of wages and materials is accorded electronically by the gram panchayat president, through a digital signature that is contained on a pen drive. As most of the gram panchayat offices in the state lack digital infrastructure and internet connectivity, many presidents are forced to give their pen drives to officials and computer operators based in the block office to ensure approval of payments within the timeframe of 15 days. This has further reduced the control of gram panchayats over the utilisation of MNREGA funds.

The fragility of the system in Jharkhand can be assessed from the cases of wage payments rejected due to technical reasons, such as seeding of incorrect bank account details of workers in the Management of Information System (MIS). More than two lakh transactions of wage payments adding to a total of Rs 21.52 crore have been rejected by the banks between April and August 2016; these transactions roughly correspond to 1.5-2 lakh workers. Most of these workers are probably not even aware of the reason behind the non-payment of their wages. For ensuring payment to these workers, the transactions will have to be reprocessed after rectifying the account details of workers. But anecdotal evidence suggests that this is usually not done and the workers remain unpaid.

Cases a worker’s wages getting credited to someone else’s bank account are becoming increasingly common in Jharkhand. Unaware of the anomaly, most workers keep waiting for their wages. Even Aadhaar – portrayed as a panacea by the central government – cannot address this issue. If a worker’s Aadhaar number is mistakenly linked with somebody else’s bank account, in case of Aadhaar-based payments, wages will be credited to the wrong person’s account.

The MoRD often dismisses these issues as “teething problems”. But the fact that these teething problems continue to happen across the state and undermine the rights of workers is deeply worrying and raises serious questions on the suitability of the EFMS for a state like Jharkhand.

It is true that the EFMS has made MNREGA more transparent for people who have access to this technology along with the required expertise for it, as it is now possible to view all transactions related to the implementation of a scheme through the MIS. But it has made the programme a big black box for workers and gram panchayat representatives. Even though it is possible to identify and track the payment of a worker and identify some of the technical reasons behind non-payment of wages through the MIS now, most workers remain in the dark as they do not have access to the technology while local functionaries are least bothered to track their payment in the MIS.

Before the introduction of the EFMS, all processes related to the payment of wages to a worker were confined within the boundaries of a block. It was possible for a worker to demand accountability from all those responsible for the payment of wages. But now it has become easy for gram panchayats and the local administration to hide behind the opacity of the EFMS and absolve themselves of their accountability.

Fixing targets for asset creation

Unlike other public works programmes, MNREGA entitles gram sabhas and ward sabhas to identify schemes for implementation. Given people’s long wishlists for works and competing interest of different groups in the village, the process of selection of MNREGA projects is an important exercise in local democracy. It also increases people’s interest in the implementation of the schemes as they are based on local needs.

In 2014-15 and 2015-16, the MoRD instructed states to undertake an ‘intensive participatory planning exercise’ to plan for MNREGA schemes in the 2,500 most backward blocks of the country. Last year, Jharkhand made good use of this opportunity to undertake a state-wide planning campaign for schemes aimed at enhancing livelihoods, managing natural resources and improving basic infrastructure in rural areas. With much enthusiasm, over ten lakh MNREGA schemes were planned by the people and gram panchayats for implementation in 2016-17. But soon after the completion of this exercise, the MoRD fixed targets for construction of specific assets such as toilets, compost pits, farm ponds and anganwadi centres for all the states. Compelled by the pressure to meet these targets, the Jharkhand government has decided to relegate schemes planned by the people to the back burner and instead impose the MoRD’s target on villages. This aside, the state government has also given additional targets to all gram panchayats for the creation of small farm ponds. As a result, gram panchayats are unable to implement those schemes that were planned by the people and were based on local needs.

The MoRD secretary recently stated that the government is “committed to a corruption-free, transparent, quality durable assets focussed programme that provides work on demand to households”. But the evidence from Jharkhand renders such claims hollow. The blatant disregard shown repeatedly by the central government against the legal responsibility to provide guaranteed employment by not allocating adequate MNREGA funds and forcing states to curb the generation of employment is deeply worrying. Getting 100 days of employment under MNREGA remains a distant dream for most workers in Jharkhand.

Centralisation of funds aided by technology that dis-empowers workers and gram panchayats is helping the central government to convert MNREGA to a toothless public-works programme dependent on the whims of the government.

In an imaginary world in which the central government might decide not to undermine MNREGA shamelessly and instead honour the need-for-work of rural households, adequate funds will have to be allocated, control over funds and planning of assets will have to be de-centralised and technological interventions will have to be simplified to enhance transparency for the workers.

Siraj Dutta is based in Jharkhand and has been working on the MNREGA for the past six years. 

The author would like to thank Ankita Aggarwal for her comments and suggestions.