Policy

Direct release of MGNREGS wages will make scheme efficient

By routing money through the state employment guarantee fund window to the workers accounts directly would eliminate delays and corruption
Direct release of MGNREGS wages will make scheme efficient

To eliminate delays and corruption, Union Cabinet chaired by Prime Minister Narendra Modi has given its nod to the proposal of direct release of wages in to the accounts of the workers engaged under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

As per the scheme, the wage component of MGNREGA will be released following the State Employment Guarantee Fund window direct to the worker’s accounts based on a fund transfer order to be generated by states’ implementing agencies in accordance with procedures prescribed by Rural Development Ministry.

Direct release of wages system under the MNREGA aims to streamline the flow of funds and to empower state governments to deliver entitlements as per the objectives of the Act. The proposed system would improve overall efficiency of implementation and workers would be assured of payment of wages in the second day of the pay order generation.

With an eye to streamline fund releases, cut pilferage and minimise corruption in the largest welfare scheme, the Rural Development Ministry had moved a cabinet proposal seeking approval to disburse over Rs 24,000 crore of annual wage payments directly from central government into the accounts of MNREGA beneficiaries across the country.

After wider consultation among various departments including Expenditure department. It was decided that the Rural Development Ministry would consult states as they implement the scheme across the country. Consequently, the Ministry wrote to all the state governments seeking their written response to the proposal that amounts to divesting state governments of authority to disburse wage payments and authorise central government to pay it directly to the beneficiaries.

Under the scheme the Gram Panchayats would be empowered to take up work as per the agreed Labour Budget without struggling for release of funds. The states would be able to spend more time in planning and improving the process efficiency without the bother of trying to manage funds for implementations. The central government would gain by releasing what is actually expended. There will be greater transparency in movement of funds and lesser levels of corruption," according the Ministry’s advisory note about the ‘ benefits of the system" proposed to the States.

Annual allocation of MGNREGA is Rs 34,000 crore, of which the wage component is 60 percent and material component, 40 percent. However, only about 30 percent is utilised for materials, leaving almost Rs 25,000 crore a year to be spent on wages. MGNREGA guarantees 100 days of wage employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work. On an average, 25 percent of rural households seek employment under the Act annually.

Despite the legal mandate of payment of wages within 15 days, the percentage of delayed payments increased from 42.4 percent in 2012-13 to 70.84 percent in 2014-15. Besides, even the rules for delay compensation issued by the Centre have not been implemented effectively by most states, resulting in prolonged wait for the wage seekers, thus diluting the essence of the scheme.The new scheme is expected to make the payment speedy and transparent..

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BK Jha is the Special Correspondent of Rural & Marketing. Prior to this he has been associated with The Hindustan Times, Political and Business Daily along with many other media organisations.
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