The baton of accountability in NREGA passes on

Timely payment is not merely a question of political or bureaucratic efficiency but that of life and death for those on the margins of subsistence

There is an ongoing Public Interest Litigation in the Supreme Court between Swaraj Abhiyan versus Union of India concerning drought and the lack of functioning of social security systems such as the National Food Security Act (NFSA) and the National Rural Employment Act (NREGA). The next hearing of the case is on December 5. One of the main issues in the case is the consistent violation of the worker's rights to timely wages. The NREGA mandates that every worker must receive her wages within 15 days of completion of a workweek, failing which a delay compensation is to be paid at a rate of 0.05 per cent per day of delay. Not only are there massive delays but the central government’s definition of what constitutes as delay is flawed leading to a vast underaccounting of delay compensation. Problems with the payments process Under the National Electronic Fund Management system (Ne-FMS), upon completion of a work week, a Funds Transfer Order (FTO) is generated at the block/ panchayat. Thereafter, the payment is processed electronically and the Centre approves the FTO digitally and the money is transferred directly to the individual workers’ account. The current definition of the delay calculates delay days only until the FTOs get generated at the block/ panchayat. Broadly, the time taken till FTO generation is the state’s responsibility and the time taken thereafter to transfer the wages to the workers is the Centre’s responsibility. The time taken by the Centre to process the FTOs and release wages to the labourers is not getting accounted as delay and hence are not getting calculated for delay compensation.

In August 2017, we reported this flaw in the method of calculating the ‘delays’ in a publicly available study (findings were published in Business Standardon August 7). The study analysed all the MGNREGA transactions (more than nine million transactions) in the financial year 2016-17 for over 3000 panchayats across 10 states. We found that merely 21 percent of the sampled transactions were paid within the stipulated 15-day period. We have conducted a similar analysis for the first two quarters of this financial year. By analysing over four million transactions in the same 10 states, we find that, contrary to the government claims of 85 per cent wage payments on time (within 15 days of completion of work week), only 32 per cent of the wage payments have been made on time.

Further, our analysis of this year’s data indicates that in 45 per cent of the analysed transactions, FTOs have been generated on time by the states but the Centre has taken more than 15 days in transferring wages. Given that this is not being considered as ‘ delay’ by the Management Information System (MIS) of NREGA, no delay compensation is being calculated for these transactions. A state-wise comparison shows that after FTO generation, it takes on an average 51 days for payments to be credited in West Bengal but only one day in Madhya Pradesh for wages to be credited. It is unclear why there is such variation across states. The true payable delay compensation for our sample is ~7.5 crore but according to the NREGA MIS it is a paltry ~1.05 crore. Thus, about 86 per cent of truly payable delay compensation to workers is not even being accounted by the central government.

In August, the department of expenditure in the finance ministry took cognisance of our study of 2016-17 data. They issued an office memorandum, which acknowledged that the delays are calculated only until the FTO is generated. The memorandum indicated that the principal reasons for such delays were “infrastructural bottlenecks, (un)availability of funds and lack of administrative compliance.”

Ironically, one month later the central government blocked funds for 19 states since many of them had not sent their audited reports to the Centre. The grave condition persisted and wages were delayed for several weeks before the payments finally began to trickle in. It is the daily wage rural labourer who is suffering in this tussle between the Centre and states. Not only was there a massive delay in payments, the flawed method of calculation means that the workers cannot be compensated for the delay too. It is certainly not the rural labourer’s fault, who has completed her work, for not being paid on time because of “unavailability of funds” or “infrastructural bottlenecks”. Problems with the payment infrastructure In an attempt to improve the payments process, the government migrated to the National electronic Fund Management System (Ne-FMS) in April 2016. Six of the 10 states that we sample in our study, migrated to the Ne-FMS system in April and the remaining in October 2016. In principle, the Ne-FMS system is supposed to hasten the wage payments and reduce the number of days taken for wages to be credited in the workers' accounts. This would be a welcome step if it would indeed achieve this feat. However, this year only 32 per cent of payments have been credited within 15 days and we fear that the situation will worsen as the year goes by owing to severe stifling of funds. Prior to the NeFMS system, the state governments would use a contingency/ revolving fund to make the payments until the Centre sanctioned the funds. The current payments system is completely centralised and the state governments cannot pay the workers even if they intend to. The recommendations in the aforementioned memorandum show that it intends to pin all responsibility to the states and payment agencies thereby absolving the Central government of all its responsibilities for wage payment delays.

The payments infrastructure requires seamless coordination between the Centre, states, payment agencies, and the administrative bodies. There should be clearly defined responsibilities for each one of them. Not only has the government violated the law but also the rights of the workers. It is a pity that one has to analyse millions of records to show statistical evidence of violations as if it were not known otherwise. Timely payment is not merely a question of political or bureaucratic efficiency but a question of life and death for those on the margins of subsistence.

The payments infrastructure requires seamless coordination between the Centre, states, payment agencies, and the administrative bodies