A new report, “Length of the Last Mile Delays and Hurdles in NREGA Wage Payments”, prepared by LibTech India and published by the Azim Premji University, with a foreword by development economist Jean Dreze, one of the brains behind NREGA, has said that aadhaar-based payments and centralisation has meant that workers “have little clue regarding where their wages have been credited and what to do when their payments get rejected.”
Pointing out that “rejected payments “are akin to bounced cheques that happen due to technical reasons such as incorrect account numbers and incorrect aadhaar mapping with bank accounts”, the report seeks details of experience concerning four payment disbursement agencies, banks, Customer Service Points (CSPs)/Business Correspondents (BCs), post offices and ATMs, stating, the imposition of aadhaar on NREGA has been “a turning point” for “a new generation of payment problems.”
Dreze, in his foreword to the report, which runs into 126 pages, comments, “It is startling to learn that 40 per cent of CSP users in the sample have experienced biometric authentication problems (at least one failure in the last five transactions). Similarly, an astonishing 25 per cent of the respondents reported instances of being informed (by SMS or otherwise) of a wage credit of which they found no trace when they checked their account at the bank.”
According to him, “When the NREGA wage payment system moved to aadhaar-based payments such as Direct Bank Transfer (DBT) and Aadhar Payment Bridge System (APBS), a new generation of payment problems emerged. One of them was the problem of ‘rejected payment’... Nearly Rs 5,000 crore of NREGA wage payments were rejected during the last five years.” The result is, “To access their wages, almost half of NREGA workers have to make multiple visits to the bank or payment agency.”
Dreze adds, “This is all the more alarming as a majority of the workers have to travel to the block to collect their wages, contrary to the common assumption that doorstep payment has become the norm in rural India. Even at the block level, people are often deprived of simple services such as updating of bank passbooks. Last but not least, NREGA workers are as bereft as ever of effective grievance redressal facilities. Instead, they experience a harrowing normalisation of hardships.”
1. Verification of Job Cards: Seeding the Aadhaar numbers of the workers with the NREGA job card.
2. Directing Payment: Making the payment through the APBS, wherein the Aadhaar is the financial address of the individual.
3. Withdrawing Money: Withdrawing money from CSPs/ BCs through aadhaar based biometric authentication. This requires the individual to seed their bank account with their aadhaar number. This is known as Aadhaar enabled Payment System (AePS).
Denial of withdrawal services and biometric failures: About 40 percent of respondents who use CSP/BC reported that they were asked to make at least one additional visit to withdraw their wages due to biometric failures, from among the last five transactions. In Andhra Pradesh, 37 out of 92 CSP/BC users reported exactly one biometric failure in 5 transactions and 23 of them reported exactly 3 biometric failures in the last 5 transactions.
Overall, it is compelling to note that nearly 30 percent of all the surveyed people reported that they experienced at least 3 biometric failures in the last 5 transactions and for about 7 percent of the respondents, each of the last 5 (i.e, 5 out of 5) transactions failed due to biometric issues. Moreover, nearly three fourths of the respondents added that they do not receive a receipt for a failed transaction.These are telling numbers. Each failure implies a revisit to the CSP/ BC which involves time and cost and also in many cases an opportunity cost of having lost that day’s wages.
Pointing out that “rejected payments “are akin to bounced cheques that happen due to technical reasons such as incorrect account numbers and incorrect aadhaar mapping with bank accounts”, the report seeks details of experience concerning four payment disbursement agencies, banks, Customer Service Points (CSPs)/Business Correspondents (BCs), post offices and ATMs, stating, the imposition of aadhaar on NREGA has been “a turning point” for “a new generation of payment problems.”
Dreze, in his foreword to the report, which runs into 126 pages, comments, “It is startling to learn that 40 per cent of CSP users in the sample have experienced biometric authentication problems (at least one failure in the last five transactions). Similarly, an astonishing 25 per cent of the respondents reported instances of being informed (by SMS or otherwise) of a wage credit of which they found no trace when they checked their account at the bank.”
According to him, “When the NREGA wage payment system moved to aadhaar-based payments such as Direct Bank Transfer (DBT) and Aadhar Payment Bridge System (APBS), a new generation of payment problems emerged. One of them was the problem of ‘rejected payment’... Nearly Rs 5,000 crore of NREGA wage payments were rejected during the last five years.” The result is, “To access their wages, almost half of NREGA workers have to make multiple visits to the bank or payment agency.”
Dreze adds, “This is all the more alarming as a majority of the workers have to travel to the block to collect their wages, contrary to the common assumption that doorstep payment has become the norm in rural India. Even at the block level, people are often deprived of simple services such as updating of bank passbooks. Last but not least, NREGA workers are as bereft as ever of effective grievance redressal facilities. Instead, they experience a harrowing normalisation of hardships.”
Excerpts:
Aadhaar and biometric related challenges In the past few years, Aadhaar has increasingly been made mandatory for social welfare programmes in India. While the process of shifting towards Aadhaar based payments started in 2013, a major push came from the Government of India (GoI) from 2014-15. This was a part of the government’s flagship Jan Dhan-Aadhaar-Mobile (JAM) trinity. In NREGA, aadhaar plays a role at three levels:1. Verification of Job Cards: Seeding the Aadhaar numbers of the workers with the NREGA job card.
2. Directing Payment: Making the payment through the APBS, wherein the Aadhaar is the financial address of the individual.
3. Withdrawing Money: Withdrawing money from CSPs/ BCs through aadhaar based biometric authentication. This requires the individual to seed their bank account with their aadhaar number. This is known as Aadhaar enabled Payment System (AePS).
Denial of withdrawal services and biometric failures: About 40 percent of respondents who use CSP/BC reported that they were asked to make at least one additional visit to withdraw their wages due to biometric failures, from among the last five transactions. In Andhra Pradesh, 37 out of 92 CSP/BC users reported exactly one biometric failure in 5 transactions and 23 of them reported exactly 3 biometric failures in the last 5 transactions.
Overall, it is compelling to note that nearly 30 percent of all the surveyed people reported that they experienced at least 3 biometric failures in the last 5 transactions and for about 7 percent of the respondents, each of the last 5 (i.e, 5 out of 5) transactions failed due to biometric issues. Moreover, nearly three fourths of the respondents added that they do not receive a receipt for a failed transaction.These are telling numbers. Each failure implies a revisit to the CSP/ BC which involves time and cost and also in many cases an opportunity cost of having lost that day’s wages.
One of the claims made by proponents of aadhaar is that it will make welfare delivery (including cash transfers)more efficient. Across the states, aadhaar implementation was made peremptory to access wages. In other words, workers were not given a choice about how to access their work and the dominant narrative was that “without aadhaar it is impossible to get work and subsequently wages”.
The perceived benefits of aadhaar in this context was most observed in Andhra Pradesh, where 81.31 percent of total respondents perceived to have quicker access to wages after linking NREGA wages account with aadhaar. In Jharkhand and Rajasthan, about 63 percent and 41 percent of the respondents respectively did not claim that aadhaar provided quicker delivery of wages.
To access their wages, almost half of NREGA workers have to make multiple visits to the bank or payment agency
In Andhra Pradesh, biometric systems were introduced prior to the aadhaar biometric project so respondents were unable to distinguish between the earlier biometric system and the aadhaar based biometric authentication system. This might have led to some confounding effect of perception versus reality. Second, there was a strong messaging by officials that wage credit would become quicker after aadhaar seeding.
In Andhra Pradesh, a dedicated third-party agency called AP Online used to address all aadhaar related problems during the linking period exclusively for postal payments. In Jharkhand and Rajasthan, on the other hand, there was no dedicated personnel/agency for aadhaar-related resolutions. An MIS manager would help out with such issues, along with other responsibilities they may have. Hence, while the hardships caused by systemic changes may be common across states, the difference seems to lie in the focus of resolutions adopted to address them.
The payments of about 13 percent of respondents were rejected. The total amount unpaid to 249 workers due to rejected payments for the period of one year was approximately Rs 7.19 lakh. Those whose payments get rejected often have to undergo a long and cumbersome process to retrieve their wages. The process of correction is unclear and takes months before the issue is rectified. More importantly, the onus of identification of the problem and rectification falls entirely on the worker for no fault of theirs.
Rejected payments are those transactions that are stuck due to technical errors of the payment system or data entry errors by the administration. When a fund transfer order is approved centrally, the wages either get ‘credited’ to the worker’s bank account or get ‘rejected’. So, a rejected payment is a failed transaction. The NREGA MIS provides numerous ‘error codes’ as to why payments are rejected. In practice, multiple error codes can be mapped to three broad categories:
In Andhra Pradesh, a dedicated third-party agency called AP Online used to address all aadhaar related problems during the linking period exclusively for postal payments. In Jharkhand and Rajasthan, on the other hand, there was no dedicated personnel/agency for aadhaar-related resolutions. An MIS manager would help out with such issues, along with other responsibilities they may have. Hence, while the hardships caused by systemic changes may be common across states, the difference seems to lie in the focus of resolutions adopted to address them.
Rejected payments are those transactions that are stuck due to technical errors of the payment system or data entry errors by the administration. When a fund transfer order is approved centrally, the wages either get ‘credited’ to the worker’s bank account or get ‘rejected’. So, a rejected payment is a failed transaction. The NREGA MIS provides numerous ‘error codes’ as to why payments are rejected. In practice, multiple error codes can be mapped to three broad categories:
- Data entry errors by the local administration – such as incorrect account number/ Aadhaar number entered in the system.
- Bank account related issues – such as dormant accounts, joint accounts, closed accounts
- Aadhaar related issues - delinking of Aadhaar from bank account due to mismatch of names, non compliance of KYC norms, participant bank related issues.
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