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Mainstream, VOL 61 No 23, June 3, 2023

The rural wage rule GOI must relinquish | Jean Dreze

Friday 2 June 2023, by Jean Dreze


by Jean Dreze

Making Aadhaar-based payments compulsory for NREGA has severely undermined workers’ rights. Rural development ministry should retract its January 30 order:

The poor history of wage payments under the Mahatma Gandhi National Rural Employment Guarantee Act took another wrong turn earlier this year. On January 30, the rural development ministry issued an order making Aadhaar-based payments compulsory for all NREGA wages from February 1, 2023 – just two days later. This has led to utter chaos and worse, the injustice of unpaid NREGA work.

Until February 1, the wage payment system had two options: “account-based” and “Aadhaar-based”. The former is an ordinary bank transfer that simply requires a name, bank code and account number. The latter is an opaque and complex payment system that seeks to treat Aadhaar as a financial address. Like a precision-guided missile, it is supposed to find your latest Aadhaar-linked account on its own. How this is supposed to help, no one has clearly explained so far.

This Aadhaar-based payment system (ABPS) has no demonstrated advantage over account-based payments. If anything, it is the opposite. For instance, rejection rates are similar with both options, but rejection problems are much harder to solve with ABPS. It has baffling glitches, like wages being redirected to Airtel wallets that workers know nothing about.

Further, account-based payments spare NREGA workers the ordeal of having to meet the norms of “ABPS eligibility”. This may require them to update their Aadhaar details, get their Aadhaar number authenticated, link their bank account with Aadhaar, “align” all the relevant documents (job card, Aadhaar card, bank account, and possibly even PAN card) with each other – any or all of those.

In early February 2023, just 43% of all NREGA workers were eligible for ABPS wage payments. The ministry’s order created a situation where a majority of workers were “unpayable”. Indeed, the mandatory imposition of ABPS has caused havoc for NREGA in the last few months. In some states, job cards of ABPS-ineligible workers have been deleted en masse to help meet the target of 100% ABPS eligibility.

Frontline NREGA functionaries are at a loss to implement the new order. Mostly, they try to discourage or prevent ABPS-ineligible workers from working at NREGA worksites – a violation of their right to work. Sometimes, attendance of ineligible workers is marked “zero” after they have worked, to ensure that the collective Fund Transfer Order (FTO) is not held up. Sometimes, ineligible workers are told that FTO cannot be processed until they meet the ABPS eligibility norms. In spite of all this pressure, the proportion of NREGA workers who are eligible for ABPS is still as low as 52% today.

The worst part of this chaos is that many workers have not been paid at all for their hard work, and will never be paid. Some are held hostage to ABPS, others to the National Mobile Monitoring System, an unreliable digital-attendance app.

The ministry’s order was immediately followed by a crash in wage payments. According to the official NREGA portal, the number of FTOs submitted for payment declined by more than 50% in February, whether one takes the preceding month (January 2023) or the same month in the preceding year (February 2022) as the baseline. The volume of wage payments also declined by more than 50%.

Perhaps this is what led the ministry to reverse gear momentarily: The February 1 deadline was extended to April 1, and then to June 1.

Wage payments resumed normal levels, but confusion and irregularities persist.

Another extension would help, but only kick the can down the road. What is really needed is a retraction of the January 30 order. There is no case for disabling the account-based option for NREGA wage payments. In fact, it is the Aadhaar-based option that should be reviewed, as it disempowers workers by putting them at the mercy of an obscure and glitch-ridden payment system that few people understand.

An impression has been created that ABPS payments are relatively corruption-proof, but there is zero evidence of that.

In fact, Aadhaar-linked accounts are especially vulnerable to fraud. If your bank account is linked with Aadhaar, and you are not careful, scamsters can easily extract money from it. Even if they lack the simple skill of cloning fingerprints, they can persuade you to put your finger in a biometric ATM under some pretext. This has happened on a large scale in the last few years. Indeed, it is one of the top fraud types listed by the National Payment Corporation of India in its updated ‘Fraud Liability Guidelines’ for Aadhaar-enabled payments.

Payment delays have plagued NREGA for more than 12 years and now there’s even the injustice of unpaid work. The rural development ministry must put in place a reliable and timely payment system once and for all. Making Aadhaar based payments compulsory is a counterproductive distraction from this basic purpose.

(Author: Jean Dreze is Visiting Professor at the Department of Economics, Ranchi University)

[Courtesy: Times of India, May 30, 2023]

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