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MGNREGA users fleeced for Aadhaar-based payments, routinely overcharged: Study

By Rosamma Thomas* 

The Mahatma Gandhi National Rural Employment Guarantee Act of 2005 is a law under which anyone willing to do unskilled manual labour at the statutory minimum wage is entitled to being employed on public works. The work guarantee is limited under this Act to rural areas, and is only for 100 days per year per household. 
Under the law, if employment is not provided within 15 days, an unemployment allowance has to be paid. It is ironic that a law meant to guarantee unskilled work for the rural poor is being systematically undone by an inordinate reliance on technology.
A recent working paper, ‘MGNREGA as technological laboratory: Assessment of Wage Payment delays for Aadhaar-based payments and impact on delays due to payments trifurcation by caste’ authored by Suguna Bheemarasetti, Anuradha De, Rajendran Narayanan, Parul Saboo and Lavanya Tamang show that interventions intended to improve efficiency and increase transparency have had negative impact, increasing delay in payments and causing additional distress to those dependent on MGNREGA for their livelihood. 
The interventions, authors note, were introduced without any “consultation or scientific piloting”. The authors demonstrate that the segregation of wage payments by caste, and the Aadhaar-Based Payment System, set to become mandatory after this year, “have violated MGNREGA clauses”.
Based on an analysis of 31.36 million transactions in the financial year 2021-22, across 327 blocks in 10 states, data the researchers accessed through the MGNREGA Management Information System, the researchers show that 63% wage payments were delayed beyond the mandated seven days; 42% were delayed beyond 15 days. The total amount involved in the transactions studied was over Rs4,500 crore. 
There is a statistically significant difference in time taken to process payment across caste, with fewer general or “other caste” group workers getting paid within seven days. This research also demonstrated for the first time that there was no significant difference in time taken to process payment through Aadhaar based payment system, when compared with the traditional account-based payments. The authors question the introduction of untested technology, when it appears to erode worker rights under this programme.
The Management Information System of the MGNREGA was introduced to ensure proactive disclosure of information. Every part of the process under MGNREGA – registration of a worker, her demand for work, allotment of work, attendance records and final payment – were all captured and available online through the MIS. It thus serves to ensure administrative efficiency and transparency, and could also serve to monitor progress. 
The fund payment delays could only be plotted through one stage of the release of payments, when the electronic muster roll is closed and data is entered on the MIS. After this, the fund transfer order (FTO) is generated and the Union government releases funds for distribution as wages for work done; this process is not captured on the MIS.
Hiring private contractors and using heavy machinery are banned under the MGNREGA. A regular concern is the prevention of corruption, and technology has been regularly brought in to serve the purpose of monitoring the programme. Standard Operating Procedure issued recently by the Union Ministry of Rural Development has included the use of drones in monitoring NREGA work sites, to inspect completed works, assess impact, take stock of complaints and survey ongoing worksites. It is significant that this comes close on the heels of the 50% acquisition by Adani of a Bengaluru-based drone-maker.
MGNREGA is also plagued by over-reliance on Aadhaar:
  1. For verifying job cards: Aadhaar numbers are seeded with job cards, and information on the job card is authenticated against information on Aadhaar database.
  2. Directing payment: Aadhaar serves as the financial address of the individual, and payment is through the Aadhaar-based payment bridge system. The Centre has recently extended, for the fifth time, the deadline for making this the sole method of payment under MGNREGA.
  3. Individuals must seed their bank account with Aadhaar, to activate the Aadhaar-enabled payment system.
The Aadhaar-based payment system has been in existence since 2016, but it existed alongside other options of payment; in January 2023, the Centre issued a circular making this system mandatory for receiving payment under the MGNREGA. “There is a huge amount of unchecked corruption in many parts of India where users are routinely overcharged or even fleeced while making Aadhaar enabled payment system transactions,” the researchers note.
63% wage payments were delayed beyond the mandated seven days; 42% were delayed beyond 15 days
In 2021, the Centre issued a circular to segregate wage payment based on caste of workers. The electronic channel of payment would thus be different for Scheduled Caste, Scheduled Tribe and ‘other’caste workers. This increased the work load of field officials and also led to sharper acknowledgement of caste differences at work sites. The cost and benefit of such measures was not studied, and activists like Nikhil Dey argue that such measures have only served to discourage work under the MGNREGA. 
In earlier interviews, Dey has argued against the use of technology when it is unnecessary. When payment was made in cash at the work site before 2008, for instance, workers could argue if there were unfair cuts and refuse to accept the reduced payment. Such forms of protest were no longer possible once payment was done through bank accounts.
Low allocation for the MGNREGA has meant that each year, a fifth of the allocation goes towards clearing pending dues to workers. With not enough funds received for granting as much work as demanded under the scheme, there is suppression of demand too, besides delay in payment. A study by Azim Premji University estimated that if all demand for work was to be met during the Covid pandemic, the MGNREGA would require four times the budget that was allocated to it. Less than half the total transactions were ever processed within seven days, as a result.
Trifurcation of wage payment by caste had important ramifications on the ground that went unreported in the national press. The researchers note that where “other caste” was predominantly Muslim, there were even instances of communal hostility. Wages of people working at the same site were received on different dates, depending on caste.
Until 2017, Aadhaar was not mandatory for work under MGNREGA. A notification of that year made it mandatory for workers to have Aadhaar, which would be used for authentication of identity. The government has claimed repeatedly, in response to Right to Information applications, that Aadhaar use in MGNREGA would increase efficiency, improve transparency, remove “ghost workers” or fake entries, and lead to reduced rejection of payments. These claims, however, are not backed by data. 
Workers, however, vouch that payment rejections have become harder to resolve, and even tracing where payment has been made is often problematic – the government has clarified that payment is made to the last account that was seeded to Aadhaar, in case a worker has more than one Aadhaar-seeded bank account.
“Most workers are unaware which account their Aadhaar was linked last to as every financial institution in rural areas coerces linking workers’ Aadhaar without their consent leading to wages getting diverted to some account without the worker’s knowledge. The consent forms are in English which the majority of the MGNREGA workers cannot understand,” the report notes.
All the pain from the relentless march towards technological interventions in MGNREGA are borne by poor workers. “For example, when the caste based trifurcation in wage transfers was introduced, and later withdrawn, the planners at the Centre did not bear any cost. All the hardships to be faced were relegated to the workers and field officials. It is therefore important for policy makers to not let MGNREGA or any policy be reduced to a technological theme park,” the researchers suggest.
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*Freelance journalist

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