Tuesday, March 29, 2016

33. Wages of Delay, Frontline, Volume 27.May 2010

Wages of Delay
Volume 27.May 2010


Wages of delay


A government that believes that the NREGA played a key role in its re-election in 2009 cannot afford to ignore the delays in payments.


A farmer putting his thumb impression on a petition against irregularities, including delayed payments, in the working of the NREGA at Akona village in Madhya Pradesh.

WHEN the National Rural Employment Guarantee Act (NREGA) was enacted in 2005, it was celebrated as a “people’s Act”. It was an Act that focussed on labourers’ rights – to employment, minimum wages and timely payments. Besides, the involvement of people’s groups in its drafting and the transparency provisions in it earned the NREGA this tag.

For over a year now, serious delays in the payment of NREGA wages have been recorded across the country. Apart from violating the law (the Act stipulates that wages be paid within 15 days of work being done), delays cause great hardship to NREGA labourers. When wages are delayed, they are forced to resort to lower-paid or exploitative employment, and even distress migration. The delays have diminished the interest of labourers in employment provided under the Act.

For instance, in May 2009, labourers in Khunti (Jharkhand) who had not been paid for up to six months insisted on earlier dues being cleared before taking up more work under the NREGA. More recently, in February in Banswara (south Rajasthan), I noticed that the highway to Gujarat was dotted with migrant labourers. One of them was Amro Jitra Garasiya (Satra Khuta panchayat), who had not been paid for afforestation work done 12 months ago! Now, he said, he was not sure if he would be paid at all. He did not want to “risk” taking on work under the NREGA any more.

Such complaints – lack of work, delays in payments and labourers losing interest in the scheme – have been pouring in from several States, including Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Rajasthan, Uttar Pradesh and West Bengal. This note is based on field visits to these States.

Are banks and post offices to blame?

This family, from Kushalgarh in Rajasthan, preferred migrating with a four-month-old baby in search of work to seeking employment under the NREGA.

What has caused these delays? In 2008, the Centre directed that all NREGA wages be paid through banks and post offices. This move was motivated by the need to separate the implementing agency from the payment agency. This separation, it was hoped, would end the embezzlement of NREGA funds. Now the administration is quick to blame banks and post offices for the delays. Government officials often claim that they do their work in a timely manner but the banks and post offices are unable to cope with the volume of payments.

It is true that the processing of payments through accounts created a “jam” as banks and post offices were overburdened with the opening of thousands of accounts in each branch. In the case of banks, that initial hurdle seems to have been largely overcome, though the opening of accounts remains incomplete. Where the account opening process is complete and banks are computerised, they are able to cope with NREGA payments with reasonable efficiency. Generally, banks do not take more than two or three days to credit wages into the accounts of labourers after they receive the cheque from the administration.

The case of post offices is different. Take, for instance, Surguja district (Chhattisgarh), where the administration relies on post offices because there are hardly any rural banks. In one block, the post office had only one employee who was responsible for opening and operating thousands of NREGA accounts. All the work is done manually as there are no computers. In addition, the post master complained that the formalities of opening accounts remained incomplete because he did not have enough passbooks. (The supply of passbooks in the district was delayed for months.) Similar problems have been reported wherever NREGA payments are made through post offices, in States like Rajasthan and Jharkhand.

Sources of delays

In Banswara in south Rajasthan, the highway to Gujarat is often dotted with labourers migrating to Gujarat in search of work. With the long delays in payment, staying back to work under the NREGA is no longer an attractive option.

There are several steps in the wage payment process. Once work is complete, muster rolls (MRs) have to be submitted to the implementing agency. The next step is the measurement of work, since most States pay wages on the basis of work done, not on attendance alone (“daily wage”). After this, payment orders (POs) listing the labourers and the wages due to them are prepared. These payments have to be sanctioned by the officials concerned (the block development officer, sarpanch, junior engineer, and so on). Then, the cheques and payment orders are sent to the bank or post office so that wages can be credited into the accounts of individual labourers. Delays creep in at some, or all, of these steps.

On tracking the payment process, one finds that there are several other sources of delays. Often the delay occurs before the cheques reach the bank/post office. After the POs have been generated, getting the signatures of the sanctioning authority takes time. An important reason for this foot-dragging is that the separation of the payment and implementing agencies has made embezzling NREGA wages very difficult. Even if the implementing agency inflates measurements and attendance on MRs, they can no longer embezzle that money as it goes directly into the accounts of the labourers. In order to cheat, they would either have to collude with the labourers or illegally operate their bank accounts or forcibly extract wages from labourers after they withdraw the money. This “loss” seems to have affected the motivation of the officials concerned. This is an indirect way in which payments through accounts are delayed.

In the present system, where payments are made on the basis of measurements rather than attendance alone, the junior engineer (J.E.) exercises a lot of power. Attendance has to be reconciled with measurement before payments are processed. Though the law requires it, in many States MRs are not maintained at the worksite. Notable exceptions are Andhra Pradesh, Rajasthan and Tamil Nadu. In other States, the practice that has evolved is to maintain “kachha” attendance and measurement records, which are faired out later on official MRs, after the J.E. approves informal measurements maintained by worksite supervisors.

However, delays have also emerged in Rajasthan where strict enforcement of transparency measures have had a noticeable impact on reducing corruption, at least in labour expenditure. If the loss of opportunities for embezzling wages were the only cause of delays, bank payments would not have affected Rajasthan. Here, it seems that apart from post offices causing delays, there is the issue of the scale of employment. During the peak season, up to 2,000 workers are known to report for work. When all workers show up for payments at the bank or post office, even computerised banks find it hard to cope with the crowds.

“Flow of funds” is another important source of delay. This is especially true in States such as Bihar, Jharkhand and Karnataka. It is not clear whether this is owing to poor planning by the district administration (for instance, delaying demand for funds, low standards of record-keeping) and/or owing to Centre-State politics whereby funds are withheld or delayed by the Centre (for instance, incomplete reports being submitted by the State, frequent changes in the norms for release of funds). Recently, in Bihar, I was told that funds were transferred just before the close of the financial year. This shows up a large opening balance and becomes an excuse for holding up further release.


Tribal women from across Orissa at a rally demanding 100 days of work under the NREGA, in Bhubaneswar in October 2009.

Record-keeping requirements of the NREGA also put a strain on the system. After the MRs, the POs have to be generated. Many States do not use a printed format for the POs. NREGA staff, often already overstretched and untrained, prepare these formats manually (in the process wasting some of their time in drawing rows and columns) each week. This slows down things and leads to errors. Ideally, this process should be computerised. At the very least, printed formats should be provided.

Finally, it is worth mentioning that distance, though an inconvenience, has rarely been cited as a source of delay. Therefore, the Rural Development Ministry’s technological solution of a “business correspondent model” (whereby an intermediary will withdraw wages from the bank or post office and deliver wages at the doorstep of labourers) cannot go very far in dealing with delays. The use of the biometrics machine (used in post offices in Andhra Pradesh) can help in cases where the volume is very high. However, wherever this model is introduced, adequate safeguards must be put in place to ensure that business correspondents do not demand an “informal fee” from labourers in exchange for the service they provide.

What can be done?

No significant delays have been reported in Andhra Pradesh and Tamil Nadu though the scale of NREGA employment is substantial in these States. In Andhra Pradesh, the computerisation of the payment process has helped to ensure timely payments. One reason for timely payments being made in Tamil Nadu is that it continues to pay wages in cash in spite of the Central government’s order that payments be made through accounts. The State has done this as it was felt that the transition to payments through accounts would cause labourers a lot of inconvenience.

What other lessons can we learn from these States?

Both States have streamlined the process of wage payments by putting in place a weekly schedule. There is a deadline for each step in the payment process (submission of MRs, measurement, sanctioning of payments, disbursal of wages). This weekly schedule is accompanied with intensive monitoring; for instance, MIS (management information system) tracking of the steps in the process that have been delayed and setting up alerts to deal with them. Apart from this, both States have appointed additional staff, especially technical staff, to ensure timely measurement of NREGA work. Each person involved in the payment process seems to be aware of the schedule and faces pressure to meet deadlines.

In Dindigul district (Tamil Nadu), the data entry operator in Shanarpatti block told me that if the NREGA website ( www.nrega.nic.in) reports any delays in wage payments for Tamil Nadu, it had to be on account of a data entry error. “In all of Tamil Nadu, wages are paid on Tuesdays,” he declared confidently. This suggests the need for a transparent system to track the payment process and to fix responsibility for delays at each step.

Going beyond Andhra Pradesh and Tamil Nadu, it is essential to go back to the basics, including the maintenance of MRs at the worksite and regular updating of job cards, so that labourers have official evidence of the dates on which work was done. The present “dual record-keeping” system (whereby “kachha” records are faired out only after measurements are passed by the J.E.) makes it vulnerable to delays and corruption.


Workers who were denied employment under the NREGA at Sheshurajapuram village near Anchetti in Tamil Nadu's Krishnagiri district holding up their nominal muster rolls cards, on April 17.

Strict measures must be taken to ensure greater accountability of the implementing bodies towards labourers. There are provisions in the NREGA that can be activated. For instance, the penalty clause (Section 25) that allows for a fine of up to Rs.1,000 when any officer fails to do his/her duty should apply automatically in cases of delays exceeding 15 days. That would go a long way in ensuring accountability.

In places where payments are being held up owing to delays in measurement by the J.E., States could consider paying labourers on a daily wage basis, at least as a short-term measure until adequate staff is appointed. Further, Schedule II of the NREGA mandates that labourers be compensated for delays in accordance with the provisions of the Payment of Wages Act, 1936. As far as we are aware, this has been used only once when 265 workers were paid Rs.2,000 as compensation in Khunti district, Jharkhand, in May 2009. (There is some evidence that there has been some improvement in Khunti where wages are now paid within one month.)

Other long-term measures would include upgrading post offices, increasing staff in rural post offices, and providing stationery and computerised facilities so that they are better equipped to deal with the workload.

For a government that believes that the NREGA played an important role in its re-election in 2009, such delays cannot be ignored. Indeed, when Prime Minister Manmohan Singh and United Progressive Alliance chairperson Sonia Gandhi spoke at this year’s NREGA Sammelan on February 2, they noted that delays in payments presented one of the most serious challenges in the implementation of the NREGA.

The Ministry of Rural Development should focus on the electoral promises made in the Congress manifesto where it “pledges at least 100 days of work at a real wage of Rs.100 a day for everyone as an entitlement under the NREGA”. These two promises assume greater importance for labourers in a year of drought and spiralling food inflation. To the extent that the Congress is interested in cashing in on votes coming through the NREGA, this is where its efforts should be directed. The Ministry, however, seems to believe that measures such as prefixing “Mahatma Gandhi” to the name of the Act and constructing “Bharat Nirman Rajiv Gandhi Sewa Kendras” under the NREGA will consolidate its vote-catching potential.

The disconnect in the Ministry’s understanding regarding the priorities under the NREGA and that of the labourers is likely to boomerang against the government.