MGNREGS’ accountability measures on wages weak
By Accountability India Staff, 20 Jul 2018

Clear rules that hold the entire government machinery accountable for delays in wages do not exist under the Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS), a team of researchers who have studied the programme for over 2 years have found.

“Overcentralisation of the architecture has meant that accountability structures have been diluted,” said Dr Rajendran Narayanan, Assistant Professor at Azim Premji University, at the inaugural Policy In-Depth session hosted by the Accountability Initiative. Thus, the state government, the Union government and banks are never put under scrutiny for what is the legal right of workers.

MGNREGS is a flagship scheme of the Government of India (GoI) which aims to provide at least 100 days of guaranteed wage employment in a financial year (FY) to every rural household that demands work. The MGNREGS provides a legal guarantee that wages be paid within 15 days of the completion of work and closure of the muster roll. The study, which analysed over 9 million transactions across 10 panchayats per district in 10 states from 2016-2018, found significant delays at each step in the payment clearance process.

Wage payments are first made under the National Electronic Fund Management System (Ne-FMS) on completion of the work week. A pay order known as a Fund Transfer Order (FTO) is generated at the Block or Panchayat. Once approved and signed by states, the GoI approves the FTO digitally and wages are electronically transferred to the State Employment Guarantee Fund. Funds are then transferred to an individual worker’s bank or postal account.

The authors found that delays are being calculated only till the FTO is sent to the Centre which means the time taken to process the FTO and transfer wages to workers' accounts is not being taken into consideration. Just 21 per cent of the payments made in FY 2016-17 were made on time, while in FY 2017-18, only 32 per cent of the wage payments made in the first two quarters of the financial year had been made on time.


Additionally, the law mandates compensation to be paid at the rate of 0.05 per cent of the unpaid wages per day for the duration of the delay beyond the 16th day of the closure of muster rolls.  There is a failure to accurately calculate delays since the definition of what constitutes a ‘delay’ does not include the actual delay till the payment of wages to beneficiaries. As a consequence, a major portion of compensation remains unaccounted. For FY 16-17, the amount of delay compensation reported for the whole country was only Rs 519 crore. The true total delay compensation is, however, estimated at around Rs 1,208 crore. Of the reported amount, only about 4% has been paid.


Even after the wages are credited, it takes much longer for the workers to access their wages due to a weak banking and disbursement architecture. These intervals too are not captured in the centralised system.

As per Accountability Initiative’s latest analysis on MGNREGS, pending liabilities (additional expenditure incurred by states over and above their funds available due to increased demand within a financial year) is seeing an upswing. In FY 2015-16, states had payments due amounting to Rs 566.99 crore. This increased to Rs 1,162.37 crore in FY 2016-17.

In FY 2017-18, as on 20 July 2018, states had already accumulated pending liabilities amounting to Rs 2,959.53 crore. Given the demand driven nature of the scheme and its legal mandate, GoI is meant to reimburse states for this additional expenditure, but the trend of accumulated higher state expenditure as a proportion of funds points to the urgent need for reform.

In all, the absence of provisions that put in place accountability measures for the wage payment process has had far reaching consequences on programme implementation. This is in spite of the fact that MGNREGS has proven to be a landmark on securing accountability at the local level through its emphasis on social audits conducted by citizens. When will wage payments, the other aspect of this critical rural livelihood programme, be accorded the same status in existing MGNREGS guidelines?

The presentation by Dr Rajendran Narayanan during the session can be accessed from here, and the study can be found here.

To download Accountability Initiative’s latest analysis on the MGNREGS, visit this page.

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