Aadhaar-Based Payments Remain A Pain Point For MGNREGA

The Aadhaar-based payment system, mandated by the government earlier this year, continues to meet with limited success while hindering demand and supply of work under the MGNREGA, according to a research.

The government introduced the Aadhaar-based payment system as a technical intervention to make wage payments through direct benefit transfer. It requires the workers’ Aadhaar number to be linked to their bank account and MGNREGA job card. It is intended to help the beneficiaries get their wage payment on time and curb corruption by weeding out fake beneficiaries.

However, a working paper co-authored by Suguna Bheemarasetti, Anuradha De, Rajendran Narayanan, Parul Saboo, and Laavanya Tamang finds no difference in the time taken to process wage payments through the ABPS compared with traditional account-based payments. 63% of wage payments were delayed beyond the mandated seven days by the union government, and 42% were delayed beyond 15 days, according to the study. According to the NREGA Act, the centre must process transactions within seven days.

For the study, the authors sampled one block per district for 10 states and downloaded every transaction for that block in FY22, giving them about 31.4 million transactions. The authors use the time taken by the union government to transfer wages to workers as a metric of efficiency. As per official rules, the union government must transfer wages within seven days of receiving the electronic invoices from the states. The authors use the percentage of transactions processed by the union government within seven and 15 days as an indicator to assess the intervention.

Analysis revealed that there is no statistically significant difference in the time taken to process payments between the two payment types: account and Aadhaar payments.

36% of transactions were processed in seven days for account payments, and 39% for ABPS.

The authors also found no difference in rejection rates. While 2.85% of account payments were rejected, 2.1% of ABPS payments were rejected.

Another study by Chakradhar Buddha and Laavanya Tamang found that in FY23, more than five crore workers were deleted from the MGNREGA database—a 247% increase compared to the previous fiscal—including several genuine, vulnerable workers now getting deprived of their right to work and livelihood, Buddha and Tamang said. The complexity of the ABPS and the manner of its rollout have a correlation with the spate of deletions, argue the authors.

On Jan. 30, the Ministry of Rural Development released a letter mandating the use of the ABPS for processing all wage payments in MGNREGA, with effect from Feb. 1. On that day, a mere 43% of MGNREGA workers were eligible for ABPS payments. As the ministry of rural development relentlessly pushed state governments to reach 100% Aadhaar seeding and authentication to ensure that workers became eligible for ABPS, the spike in deletions began, according to findings by the researchers. Under pressure to reach targets and lacking any training or understanding of the Aadhaar process, local officials found an easier way—by deleting ABPS-ineligible workers from the MGNREGA roster, they said.

Interventions such as ABPS are clearly technically complex, the researchers said. In their fieldwork, the researchers found that a significant number of data entry operators and local bank officials have very little understanding of the linkages and procedures required for ABPS, or authentication.

The progress of ABPS was reviewed, and the mixed route of wage payment—NACH and ABPS—was extended until Dec. 31, according to a press release by the government in August. As of Aug. 15, only 57% of MGNREGA workers have been eligible for ABPS, according to Buddha and Tamang.

Making ABPS mandatory will be a disaster currently, said researcher Debmalya Nandy, member of NREGA Sangharsh Morcha. A significant number of workers do not have their Aadhaar mapped with their job cards currently across the country. If we delve deep into it, we see that one of the key reasons for it is name (spelling) mismatches in Aadhaar and respective job cards, he said. In a rural setting, it generally takes a long time to rectify such errors; therefore, making ABPS mandatory would lead to large-scale exclusions in accessing NREGA work, Nandy explained.

Also, today, when an ABPS payment gets rejected, which is a common phenomenon, there is always an option to initiate a NACH payment and get the payment processed quickly to the worker's account. In mandatory ABPS architecture, this won't be possible, he said. It is therefore quite obvious that a mandatory ABPS mode of payment would leave a lot of genuine workers deprived of employment under Nrega and will further weaken the programme, which is already emaciated through centralised systems and er-the-top t technological interventions like the National Mobile Monitoring System (NMMS), a digitised attendance system, said Nandy.

First, it requires the workers to submit their Aadhaar details to be linked to their job cards.

Policy design for technical interventions needs to be more consultative, properly piloted, and designed keeping the workers in mind, according to Buddha and Tamang.