The National Rural Employment Guarantee Act (NREGA) is going through a deep crisis due to delays and failures in wage payments.
While the problem is not new, technology based payment models have made the situation worse.
How is the crisis manifesting itself?
NREGA’s payment pipeline is rotten, and this is getting manifested through - “delays, rejections, diversions and lockage” of payments to be dispersed.
Delays in wage payments have plagued NREGA ever since bank payments were introduced about 10 years ago.
1st Step - Payment delays that occur before being cleared by a “Fund Transfer Order” (FTO), is touted as the “first step delay”.
This step is reasonably transparent and is designed to calculate the total compensation that has to be paid to workers (by state government).
Lately, there has been significant progress in addressing this delay.
2nd Step - Second step delay is when bank transfers themselves are held up.
A recent analysis of NREGA wage payments in 10 states, found that second-step delays were as long as two months on an average in 2016-17.
Repeated demands for second-step delays to be disclosed and compensated for by the central government have fallen on deaf ears so far.
Reason - One reason why delays have persisted for so long is that the payment system is constantly being re-designed.
From cash payments initially, it was changed to post-office payments, bank payments, ‘NeFMS e-transfers’ and now ‘Aadhaar Payments Bridge System’ (APBS).
Significantly, none of these innovations has been able to ensure payment within 15 days of the work being done, as prescribed under NREGA.
Why are payment rejections happening?
Even as the delays continue, the latest payment systems are largely responsible for rejected payments, diverted payments and locked payments.
Rejected payments were not unknown earlier but they have become endemic ever since the linking of NREGA wage payments with Aadhaar.
Linking the bank accounts of NREGA workers with Aadhaar may seem like a trivial matter but in practice it creates endless problems.
“e-KYC” (Aadhaar based biometric authentication) has practically become compulsory for NREGA workers, which is proving to be a fountain of glitches.
Shockingly, more than 200 different reasons for payment rejections have been identified and some errors are beyond the government’s comprehension.
According to the NREGA’s management and information system (MIS), a whooping Rs 500 crore of wage payments were rejected in 2017-18 alone.
What is a “Diverted Payment”?
“Diverted payment” is endemic to the “Aadhaar Payments Bridge System” (APBS), which is the latest reconfiguration of the wage payment system.
Under APBS, Aadhaar effectively becomes a financial address and wages are automatically paid into the worker’s last Aadhaar-linked account.
Most workers are unaware of this rule, and so they often look for their money in the wrong account, which never comes.
More interestingly, sometimes, wages are paid into accounts that workers know nothing about, like “mobile wallets” or the “Jan Dhan Account” that was opened without consent.
These diverted payments are very difficult to retrieve and most NREGA workers are powerless to do anything about them.
What constitute locked payments?
Many NREGA workers are unable to withdraw their wages from their bank accounts even after their wages have been paid to their proper account.
This is because workers are locked out of their bank account when the bank treats it as “dormant” or “frozen” because it does not meet the current norms.
One of these norms is e-KYC, a major hurdle on its own for NREGA workers, but there are others too – like inactivity for a specified number of months.
Similarly, accounts get frozen when “Pradhan Mantri Awas Yojana” money is sent to a worker’s bank account, as this would exceed the maximum limit.
More significantly, freezing of accounts tend to happen even without the consent of the concerned person.
What are the consequences?
No Consent - The various payment flow flaws are largely associated with brazen flouting of consent principles and norms.
For instance, moving an account to the APBS system is not supposed to happen without informed consent.
But in practice, NREGA workers are being herded en masse into APBS without even informing them, let alone consent.
Grievance Redressal - Even as NREGA workers run from pillar to post to get their remuneration, there is no one to inform or assist them.
Importantly, the ordeal of workers is imaginably pathetic, as they’ll have to travel considerable distances and bear with long lines at various offices.
Corruption - Aside from causing enormous hardship to NREGA workers, delayed and failed payments are a major source of corruption.
When workers lose interest, corrupt middlemen step in and take advantage of the lack of vigilance to siphon off NREGA funds by fudging the records.
Here, it is important to note that, “linking of bank accounts with Aadhaar makes little difference”, and might even exacerbate corrupt practices.
Scheme Drowns - NREGA is a demand-driven programme and if the demand vanishes because wage uncertainty, nothing will be able to save it.
Averting this requires a reliable payment system, higher wages, ‘delay compensation ’, effective grievance redressal and ‘systemic consistency’.
