Poor Remuneration and Late Payments: The NREGA Payments Trap

The current, complex payments systems employed by the government must give way to simple, decentralised systems to ensure greater accountability as empower local governing bodies.

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The Union government’s approach to payments under the National Rural Employment Guarantee Act (NREGA) has been a ridiculous joke, played on the workers who wait for their hard-earned money for a long time. Many do not get their payments at all, owing to various local malpractices.  

The complex, centralised payments system has resulted in a never-ending nightmare for the NREGA workers who work hard for a meagre wage. It is known to all that NREGA wages do not even match the state’s corresponding agriculture minimum wages and continue to be ridiculously low, despite workers demanding dignified wage for a long time.

Let us understand how the centralised NREGA payments system and the official Management Information System (MIS), together create a great delusion in the tracking of payments. 

The NREGA payments system is  divided into two stages by the centre;  The payments generation  stage at the local level is defined as ‘stage one’ and the release of payments by the central government to the worker’s bank account is termed as ‘stage two’. 

Stage one consists of different processes at the local level and is the responsibility of the local administration.  In this, the filled ‘muster rolls’ (daily attendance sheets of the workers) need to be  entered into the MIS and collated in the form of a “wage list” (worker-wise wage payment information).  Several such wage lists are collated into different fund transfer orders (FTO) for processing payments in different batches. 

Subsequently, the FTOs need to be digitally signed by the authorised signatories. In most states, Panchayat secretaries are the first signatory while the Block Development Officer is the second. However, many states have also authorised Panchayat heads (Mukhias or Sarpanchs) to be second signatories, which means that they have the authority to sanction payments. 

Once the FTO is digitally signed by the two authorised signatories, stage one of the payments processing system ends and stage two begins.  In stage two, the central government is required to process the fund transfer orders from their end using the National Electronic Finance Management System (NEFMS) through a single bank, directly to the workers account.

This entire process needs to be completed within 15 days of the end date of the muster roll and as per  the law, the worker should get their payment within these 15 days.

The centre has put in place mechanisms in their MIS  to show that  bulk of the payments are generated” within 15 days. This, practically, means that the stage one processes are being completed within 15 days. However, as per the Act, the entire payment process should be completed within 15 days. This is a clever move  to mislead citizens and create an illusion that payments are made on time;  a clear violation of the Act. 

While payments are routinely delayed – even the central delays are very frequent – the MIS will keep showing that bulk of the payments are generated within 15 days. For example,  as of  September 1, 40% of payments for the month of August are pending from the central government, as per Report no. R.8.8.1 in the official website. These payments amount to about Rs. 2,593 crore of wages. However, on the same website, it shows that 99% payments have been generated on time. 

Report Showing 40% ( worth Rs. 2593 crore) of the August Payments are pending as of September 1.

One would naturally ask, what is the percentage of delay for the stage two payments cycle?  This is the wrong question to ask. As per the Act, one should be concerned about ensuring payments to workers within 15 days from the end date of the muster roll and should not fall into the trap of calculating the stage one and stage two delays separately. 

Going by the terminologies coined by the government, we should see if stage two  of the payments cycle  is completed within 15 days from the end date of the muster roll. We don’t  have a mechanism to track that with the publicly available reports on the website. Instead,  the ministry has come up with a report called ‘Stage Two Tracking’ which shows the volume of pending payments from the central government at any given point. 

However, once the payments are cleared by the government, subsequently, the pending transactions and amounts  are reduced in the report. Therefore, this is by no means a  measure of stage two delays and does not tell us whether payments are being credited to worker’s bank accounts within the stipulated timeline. 

The stage two tracking report surfaced on the website when, in 2018,  the Supreme Court had directed  the Union government to show the full extent of delays in payments on the NREGA website and pay compensations to the workers accordingly. 

However, the current reports on the website  do not reflect the total  number of transactions  delayed  beyond 15 days or the total volume of money involved in such delays. This is clearly in contempt of court orders. 

While the government should act transparently to put in place systems to reduce delays in payments and show the true extent of current delays, it has chosen unfair means, through a highly sophisticated MIS, to confuse people instead. The workers, most of whom do not have smartphones, internet access or access to the website, are never clear on what is causing such long delays and where exactly the payments are getting stuck. 

Also read: Nearly Rs 1,000 Crore Misappropriated In Last Four Years Under NREGA Schemes

Generally, when they ask a frontline functionary or the worksite supervisors (commonly known as ‘mates’), they get the common response that, “Abhi MIS nahi hua hai” (MIS is not done as yet). The term MIS, therefore, is almost synonymous with delayed payments for the workers. 

So, does the central government not even calculate the extent of delays? Before the Supreme Court in 2018, the central government had stated that only 17% of payments in 2016-17 and 43% in 2017-18 were paid on time (that is, within 15 days), which means they keep track of them but deliberately do not  place the report in the public domain. 

The Centre’s claim of fixing all payment-related issues through the Aadhaar-based system is a plain lie. Contrary to the Union government’s claim, the introduction of Aadhaar into the NREGA payments system has proved to be detrimental and has created several challenges in ensuring timely payments to the workers. 

The introduction of Aadhaar into the NREGA payments system has created huge issues wherein payments  get misdirected to someone else’s (other than the worker) bank account due to Aadhaar-bank linkage errors and a huge number of transactions are get rejected, showing “inactive Aadhaar” as the error. This is typically a phenomenon where the Aadhaar-based payment is initiated but for some reason, the bank has de-linked the Aadhaar from the worker’s bank account. 

Women labourers under the National Rural Employment Guarantee Act (NREGA) on the outskirts of Ajmer, Rajasthan. Source: PTI

Apart from this, there are Aadhaar-based exclusions reported time and again from many states. Many  genuine job cards/worker’s names  have been deleted  in many states  due to the absence of Aadhaar. 

One who closely observes the NREGA at villages would acknowledge that the issues of NREGA payments are not limited to the matter of Aadhaar linkages; it has deep connections with the quality of local implementation. 

For example, many workers across the country do not even use their own job cards  while working. They work on other’s job cards and are paid a fraction of the full wages in cash by the job card holder. Often, influential locals, with full support from the administration, use their job cards for earning money in this manner. Also, workers often start working at the worksite only to realise after a few days that their names have not appeared on the E-muster rolls. They are never paid for those working days. 

Almost 70% of the centrally allocated funds have been exhausted this year (as of August 31)  and payments have been delayed almost by a month at least twice within the first five months of the year. As mentioned earlier, the bulk of August payments are on  hold as of August 31. In such circumstances, the ground implementation of the NREGA will  be negatively impacted  and significantly slowed  down going forward, in the absence of adequate allocation and timely release of  payments. 

On top of all of this, the government has, very recently, introduced a caste-based payments processing system wherein the FTOs will be segregated into three different caste categories  (SC, ST and Other)  and will be processed separately. This arrangement is not only unnecessary but will add to the complexities and delays. The government should simply focus on making timely payments to all those who have worked under the programme and should not experiment with their hard-earned money. 

The union government should come up with simple, decentralised mechanisms wherein Gram Panchayats will have a key role in sanctioning and processing the payments. It will promote greater accountability in the NREGA processes and will also empower local governing institutions. 

Debmalya Nandy is associated with NREGA Sangharsh Morcha and has worked in the tribal areas of Jharkhand and Odisha for the last 12 years.