Economic Survey 2019: Aadhaar-linked payments checked leakages

Citing Awadh Nawab Asaf-ud-Daula’s flawed “food-for-work” programme for famine-stricken people, the Economic Survey 2018-19 has criticised the execution of the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) under previous governments and described how things improved after Aadhaar-linked payments (ALP), tied with Jan-Dhan accounts, were introduced in 2015.

Under Asaf-ud-Daula’s “food-for-work” programme, started in 1784 in Lucknow, one set of workers was employed during daytime to construct the Imambara while another lot was hired at night to demolish what had been built.

Chief Economic Advisor (CEA) Krishnamurthy Subramanian has given a chapter in the Economic Survey — his first — to highlight how direct benefit transfer (DBT) in the MGNREGS has improved wage payment, raised the number of muster rolls filed, increased the demand for and supply of work, and reduced distress among vulnerable sections such as women, differently-abled people, and scheduled castes and scheduled tribes.

More importantly, it has checked leakages in the scheme by eliminating “ghost workers”, the Survey said.

The Survey advocated creating a real-time data base of rural distress, using the MGNREGS job demand data.

It said in blocks not affected by drought, there was no effect of Aadhaar-linked payments on the number of persons demanding work, but in drought-affected blocks the number of persons demanding work rose by 20.7 per cent after the system was introduced.

In 2015, the government introduced Aadhar-linked payments in the MGNREGS in 300 districts that had a high banking penetration, while the rest were covered in 2016. 

The Survey said so far of the 116.1 million active workers under the MGNREGS, 101.6 million with Aadhaar (87.51 per cent) had been collected and seeded.

Almost 55.05 per cent of payments under the MGNREGS are through the Aadhaar-based Payment Systems.

Impressed by the MGNREGS model, Subramanian has advocated using the Aadhaar-linked payment system and other technological advancement in other schemes of the government such as the public distribution system, scholarships programme, and LPG subsidy.

“The adoption of DBT in programmes which involve transfer of cash benefits (scholarships or pensions) and price subsidies (such as those given for kerosene, liquefied petroleum gas (LPG), public distribution system (PDS), fertilisers and other input subsidies needs to be strengthened to minimise exclusion and inclusion errors. This will make public spending more efficient and effectively targeted,” the Survey said. The Survey said in the pre-Aadhaar period, the average amount disbursed to bank accounts more than doubled from Rs 1.82 crore per block per year to Rs 3.98 crore per block per year. 

“This indicates that more funds flowed through DBT after ALP was instituted,” the Survey said.

However, civil society activists and people working on the MGNREGS say the introduction of Aadhaar-linked payment and DBT have increased exclusions and, instead of facilitating payments, hurt workers more.

“Even before ALP and DBT was introduced in the MGNREGS, over 100 million bank accounts had been opened under the programme and wages were being deposited there. Aadhaar-linked payments have denied benefits to eligible people,” Nikhil Dey of the Mazdoor Kisan Shakti Sangathan told Business Standard.

He said the Survey’s claim that the number of muster rolls under the MGNREGA rose after Aadhaar-linked payments were introduced was incorrect. Demand for work has always been there in distressed districts, he said.

“There also has to be a political will in running the programme, which leads to demand for work,” Dey said, citing the example of Rajasthan, where the person days of work under two different political formations showed a variance.