Now, rural job scheme wage accounts can be put to multiple uses

Finance Minister P Chidambaram has allowed post office accounts opened by wage earners under the Mahatma Gandhi National Rural Employment Guarantees Scheme (MGNREGS) to be used for purposes other than depositing wages.

In a decision hard to comprehend, the finance ministry had announced in a notification in 2008, that NREGS (former name of MGNREGS) wage earners be allowed to open accounts for their wages without any minimum deposit, cheque book facility and other frills associated with bank accounts – but that they be used only for MGNREGA funds. They were called Workers’ Wage Accounts. The result was, wage earners found they had to maintain multiple accounts — one for MGNREGS wages, one for pension and another for other banking activities.

On December 15, Rural Development Minister Jairam Ramesh wrote to FM Chidambaram that the rule was impractical and was causing a lot of hardship to MGNREGS wage earners. Since nothing other than MGNREGS wages could be deposited in these accounts, this defeated the very purpose of the direct benefits transfer initiative “described by you as a game changer”, Ramesh wrote. There are 36 million accounts and 43 per cent of all MGNREGS payments go through them.

On December 24 the finance ministry withdrew the previous notification and issued a new one, allowing not only MGNREGS wages but also deposits and other government benefits to be deposited in these accounts. Rural development ministry sources said they were astounded and pleased that it took just eight days for the finance ministry to clear what was admittedly a small administrative step, but one that had inconvenienced millions of wage earners in the country.