Rural development minister finds NREGS payments via banks impractical and unwise.
Payment to workers under the National Rural Employment Guarantee Scheme (NREGS) via a seamless bank transfer will no longer be the norm, Union minister for rural development Jairam Ramesh said on Monday, because it is has proved impractical and “unwise”, with delays in payments. He said the government would revert to cash payments.
NREGA workers were earlier paid in cash but because of leakages, the money was later routed through bank and post offices. Now, where banks and post offices are far away, workers will have the option of claiming their money in cash.
Speaking at a workshop on Monday on NREGS reforms, Ramesh said there were areas where banks were miles away and there were no post offices either. But because the government policy was to pay through banks, workers had to travel miles to claim payment, leading to harassment and delays in payments.
The minister has been harping on the Business Correspondent (BC) model as a remedy to the delay in payments till the recent past. However, on Monday he said: “The BC mantra is useless without banks. Narayanpur in Chhattisgarh doesn’t even have a post office. So, you have to allow cash payments there.” He said BCs were one of several options available. But, cash payment would be a fact of life in areas with no banks and post offices, especially in Naxalite-affected areas, the minister said.
He said State Bank of India would roll out mobile banks in Bastar (Chhattisgarh) next week but only in some areas. “So, there can be no single magic bullet for the problem of payment of wages,” he said echoing the concern expressed by many NREGS activists two years ago when the guidelines were changed overnight to facilitate payments through banks and post offices and making cash payments almost illegal.
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“When bank and post office payments were started, the principle was undoubtedly good. But the way it was imposed overnight was not correct. It caused a big jam in the system and this led to chronic delays in wage payments, '' said Jean Dreze, economist and activist, giving various examples of the hardships workers had been put to due to the change.
Ramesh said he’d list some other needed changes in a week. Among other issues, he said he was not seeking parity between NREGS wages and minimum agricultural wages of the states. Instead he would seek an amendment in the Minimum Wages Act to ensure that NREGA work was recognised as a separate kind of employment, with wages different from agricultural wages. He said parity would be an incentive for states to increase minimum wages irrationally, to get more funds under NREGS.
He also hinted at increasing the six per cent administrative cost allowed under NREGS. Since more and more expenses are being met from that money, the cap on six per cent may have to be relaxed, he said.