MGNREGA payout delays underestimated

Despite several measures, payment holdups are rampant because method of delay compensation is flawed

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides a minimum of 100 days of work in a year for every rural household at a minimum wage. Because of MGNREGA, for the first time in the country, a transaction-based Management Information System (MIS) has been made available in the public domain; a great feather in the cap of transparency. Any essential safeguard in MGNREGA is delay compensation to be paid, as penalty, when workers don’t receive wages within 15 days of completion of work. Despite several progressive measures, payment delays are rampant and the method of delay compensation is flawed leading to massive under-calculation of the true payable compensation.

In order to assess the extent of the true delays in wage payments and the associated under-calculation of delay compensation, we present some intermediate findings from an ongoing study. We have analysed over 90 lakh records for the financial year 2016-17 from a random sample of 3,446 panchayats across 10 states. In our (fairly large) sample, only 21 per cent of wage payments for work done are completed within the stipulated 15-day period. In 47 per cent of the records analysed, only partial delay compensation is being captured and the remaining 32 per cent of the records are not even being considered as delays in the NREGA MIS. These are due to the flawed method of calculating delay compensation. On aggregate, in our sample, while the true total compensation payable is about Rs 36 crore, only about Rs 15.6 crore is being calculated in the MIS. In other words, about 57 per cent of the true payable compensation is not being calculated at all. This is in gross violation of the spirit of the law.

The term “delay” has been manipulated to underplay the actual delays by the government. Once the work is completed, an electronic voucher called the Funds Transfer Order (FTO) is generated at the block/panchayat. After two digital signatures, the FTO is electronically sent to the Public Finance Management System (PFMS) at the Centre. The Centre on its part, after a sequence of more technical steps, transfers the wages to the beneficiaries’ accounts. The date when the wages are deposited to the beneficiaries’ accounts is known as the credited date on the MIS. Instead of counting “delays” from the time of muster closure till the credited date, the MIS calculates delay in days only till the payment date. Payment date is actually the date on which the second signature on the FTO is done at the block and not the credited date. Thus, the delays accrued from the FTO signed date till the credited date is not treated as “delay” in the MIS.

 

This leads to two broad cases.
 
Case 1: When the FTO second signature is done after 15 days of completion of work. Suppose the wage for a week of work is Rs 1,002 and the muster was closed on July 5, 2016. Suppose the FTO second signature happened on September 10, 2016, and the credited date is October 20, 2016. For this situation, the prevailing flawed method considers a delay of only 52 days (between July 5 and September 10) and not the true delay of 92 days (between July 5 and October 20). The prevailing method yields a compensation amount of Rs 26 whereas the true compensation should ideally be Rs 46.
 

Thus, while the state government’s delay is being accounted, there is no accounting of the delay in the funds transfer from the Centre. Such partial accounting for delay is observed in 47 per cent of the records in our sample.
 
Case 2: This is the case is when the FTO is signed within 15 days of the muster closure but crediting to workers’ accounts exceeds 15 days. Findings for this case are in the table. About 32 per cent of the records in our sample fall in this category.
 
This case corresponds to the scenario when state governments are doing their job reasonably on time and yet crediting to workers’ accounts doesn’t happen on time. The Centre doesn’t acknowledge delays beyond FTO second signature date, so no compensation is being calculated for these cases.
 

As can be seen in Table 1, when the states are sending the FTO to the Centre within 15 days, the workers are experiencing an overall average unaccounted delay of 63 days in our sample. Further, in our sample, as clearly depicted in Table 1, there appears to be much variation in the time taken by the Centre to release funds to different states. In the two extremes for this situation are Kerala and Madhya Pradesh. In other words, when both these states seem to be doing their part of the job well, it appears that it is taking 14 times longer for Kerala to get funds in comparison with Madhya Pradesh. The causes for this intriguing observed pattern of variation are, as yet, unclear.
 

The provision of the compensation clause in the NREG Act, should ideally reduce payment delays. As things stand, the large delays are dissuading workers from taking up NREGA work. Currently, it is unclear as to who assumes responsibility for the delays accrued once the FTO is generated at the state level. And the meagre amount of compensation is not providing any buffer to the labourers. The flaw in the method can be easily rectified in the MIS provided there is political and administrative will. To add salt to the wounds, even the partially calculated compensation can be rejected by the block programme officer on arbitrary grounds. In the last year, only six per cent of the reported delay compensation was actually paid. This defeats the purpose of an automated report. There is a need for a well thought out framework to ensure minimal delays in wage payments. In the event of such delays, labourers must be compensated for the entire duration.

Narayanan is a faculty member at Azim Premji University, Bengaluru. Dhorajiwala and Golani are independent researchers.
The views expressed are personal