Business Today

Investigation MNREGA: Labour in Vain

With another general election ahead, Business Today travels to two of India's poorest states - Bihar and Jharkhand - for an update on how MNREGA is being implemented.
twitter-logo Sarika Malhotra        Print Edition: April 27, 2014
Investigation MNREGA: Labour in Vain
MNREGA was a colossal welfare programme that helped the Congress-led UPA retain power in 2009. But it has been marred by large-scale corruption.(Photos: Sarika Malhotra)

Rekha Devi, a native of Mahant Maniyari village in Bihar, opened an account with the local post office in 2008. That was when she enrolled for work in a livelihood programme of the central government. Over the years, she worked as a manual labourer on various projects as part of the programme launched under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA). Her wages were credited directly into her post office account. The money was withdrawn as and when required. Everything went fine. There was one problem, though. She didn't know about the account. Confused? So was she when she found out about the account a few months ago.


REKHA DEVI

A resident of Bihar's Mahant Maniyari village, Devi found an MNREGA job card and post office account had existed in her name since 2008 though she was unaware of it

"I first thought it was some other Rekha Devi with the same address but even my husband's name was correct"
Devi, 35, was told about the account by social activist Sanjay Sahni, who trawled through the MNREGA website to find out details of works undertaken in Ratnauli and Mahant Maniyari villages, in Muzaffarpur district. "I was not aware of any such account, nor had I seen its passbook," she says. When she approached the post office to find out about the account and withdrawal of money the MNREGA website showed she had apparently received, she got no response. "I do not know who opened the account in my name," says Devi, who actually opened an account only in May 2012 when she began working on an MNREGA project to support her three children and a husband who suffers from a mental disorder. "I thought it was some other Rekha Devi with the same address but even my husband's name was the same."

MNREGA is the showpiece welfare legislation of the Congress party-led United Progressive Alliance (UPA) government. The programme that promises to provide 100 days of manual work per year to all rural households was launched with much fanfare in February 2006. The scheme was an important factor that helped the UPA to retain power in 2009. But it was marred by rampant leakages of funds and large-scale corruption. As wages were distributed in cash based on manual entries made in muster rolls, or attendance sheets, it was easy for anyone who could exploit the system - be it the village headmen, local administration officials, contractors or middlemen - to siphon off money, with each person in the implementation chain getting a fixed percentage in the spoils. In 2008, the government decided to transfer wages directly into the bank or post office accounts of beneficiaries. Has it helped? Not much, says Sahni.


SURENDRA SHAH

This resident of Bihar's Amrakh village worked on a road project for 40 days in 2010, after which his passbook was taken away by the village munshi. He got the passbook back in 2013. The passbook shows money was credited into and debited from his account even when he was not using it

"I argued with the munshi and got the passbook back. I never got any money for the MNREGA work"
Sahni says that in 2011 he checked the muster rolls of Ratnauli and Mahant Maniyari villages. Nearly a quarter of the people listed in the rolls were unaware that bank or post office accounts existed in their name and that money had been deposited and withdrawn from these accounts. A majority 60 per cent of those listed had never even worked in any MNREGA project. Little has changed since then. In neighbouring Vaishali district, villagers and activists claim at least 12 to 15 per cent people are unaware that accounts exist in their name. "Account opening is in the hands of the post master. Connivance with village administration to open accounts is common. Since most people are illiterate, only thumb impressions are needed to open and access the accounts. These impressions can be of anyone as no one ever checks them," says Sahni.

Across Bihar - and most likely in several other states as well - a similar story is playing out. In Bihar's Muzaffarpur and Vaishali districts, Business Today found that most job cards and account passbooks are kept by the village strongmen. Discrepancies in deposits and withdrawals are evident even in cases where the beneficiaries have their own cards and passbooks. One such case is that of Madina Begum, a resident of Mahant Maniyari village. The 50-year-old can't read or write but accesses her own account. Her passbook shows a deposit of Rs 11,400 for a plantation work, but she says she got only Rs 10,000 from the post office. The passbook also shows deposit and withdrawal of Rs 5,016 and Rs 6,344, but she wasn't aware of these transactions. "I do not know about these entries. But I do know how many days I worked and how much I earned on each project," she says.


HADISHA KHATUN

The resident of Mahant Maniyari village never worked on a MNREGA project. She says her passbook and job card were kept by the village mukhiya's men until recently. The passbook shows a deposit of Rs 1,400 on Sept 2, 2011, and withdrawal of the same amount a fortnight later

"The account is in my name, so I should get the money"
BT also found that many MNREGA projects exist only on paper. In many cases, money had been spent with barely any productive assets to show for. In several cases labourers worked for 10 to 15 days but wages in their names were raised for 40 to 60 days. The additional money likely disappeared into the hands of village and block administration officials.

In Bhojpur district's Agarsanda panchayat, for instance, the arbitrary manner in which muster rolls and worksheets are prepared is evident by work undertaken on public holidays and festivals such as Vijay Dashmi. The rolls also show women working on festivals such as Teej, when they observe fasts through the day. Pond digging work was taken up in the flood-prone area in the rainy season, when such activities are banned.

In Vaishali village of the eponymous district, a signboard alongside a road showed Rs 1,62,425 was spent on planting trees as part of a MNREGA project. But the road did not have any tree. Activists say plantation work is the easiest route to make money in MNREGA. Why? In the case of an inquiry, the simple answer is that the plants dried. This was also the explanation that Vaishali Block Development Officer Kumar Patel, who had the additional charge of programme officer for MNREGA from July 2011 to January 2014, offered BT. "Plants are eaten by animals. They are destroyed due to village rivalries. In most cases, plants dry and die as they are not cared for by labourers."

MARRED BY LEAKAGES

Since 2006, the central government has spent a staggering Rs 2,43,178.72 crore on MNREGA projects, the programme's website shows. Of this, 60 per cent would have been used to pay wages, as mandated in the scheme. It would be naïve to believe the entire amount reaches the intended beneficiaries. Jairam Ramesh, Union Minister of Rural Development, acknowledges the problem. "In our delivery system the leakage is more and the coverage is less? How much money actually reaches the beneficiary is a big question mark," he said during MNREGA Divas in New Delhi in early February.

Estimates of leakages vary from state to state. A 2012 study by the Centre for Environment and Food Security, a non-government organisation based in New Delhi, estimated that only 27 per cent of the amount earmarked for payment as wages reached the intended beneficiaries in Bihar. Shankar Singh, a social activist from Rajasthan, expects leakages in the state to the tune of 30 to 35 per cent. In Jharkhand, activists say at least half the amount is siphoned off. A 2010 study by brokerage CLSA said that roughly 30 per cent of the central government's projected $50 billion (about Rs 310,000 crore at current exchange rates) spend on MNREGA over five years would be lost through leakages.

The Comptroller and Auditor General last year conducted a performance audit of MNREGA for the period from April 2007 to March 2012. It checked the scheme's implementation in 3,848 gram panchayats and found glaring inefficiencies. Given that India has 238,617 gram panchayats, actual losses could be much higher. R. Subrahmanyam, Joint Secretary in charge of MNREGA at the Ministry of Rural Development, admits there are leakages but says one should take a balanced view. He cites the example of Andhra Pradesh where leakages are in the range of one to six per cent only.

Surjit S. Bhalla, Chairman of Oxus Investments, an economic research and advisory firm, says less than 15 per cent funds earmarked for welfare programmes reach the poor. He adds that, in discussions about corruption in MNREGA, a lot of emphasis is given on leakages from wages since they account for 60 per cent of the spending. But 40 per cent of the total MNREGA amount is spent on procuring materials required to execute projects. "The material budget can be siphoned off to a large extent pretty easily in MNREGA. There are hardly any assets to show for."

CHECKS AND BALANCES

Subrahmanyam, the ministry official, says MNREGA has multiple levels of checks to prevent corruption. These checks include conducting social audits and forming vigilance committees in each state. But he admits that in most states audits are not conducted in the proper manner. "Some cases show 100 per cent social audits and zero per cent irregularities. We know that is not possible," he says.

All villagers and social activists BT spoke with in Bihar and Jharkhand said they had never participated in a social audit. Mohammed Kalam, Mukhiyapati of the Vaishali gram panchayat, says that block administration staff generally conducts the audit while sitting inside the panchayat office and without physically verifying the work sites or interacting with activists or labourers.

Villagers are unaware that they have a right to demand work and that the government must pay them an allowance if it cannot provide work. Activists say administration officials do not even receive application forms in many cases so that the mukhiya's favourites get jobs on paper and they share the money. A grievance redressal mechanism is also non-existent. Anil Kumar Bhagat, a social activist from Vaishali district, says false police cases were lodged against some panchayat committee members after they sought to know details of MNREGA schemes from block or district administration by filing Right to Information (RTI) requests. Bhagat filed an RTI request on October 8 last year regarding a welfare scheme in Muhammadpur panchayat of Vaishali district. The next day, the block development officer filed a first-information report against him with the police accusing him of interrupting government work and trying to extort money.

False police cases, however, is not the biggest threat activists face. Sometimes, they pay with their life, too. Sahni, the Muzaffarpur activist, says he and fellow RTI activist Ram Kumar Thakur in 2012 highlighted embezzlement of funds in Ratnauli village. This led to the state's rural development department ordering a social audit. Subsequently, Thakur was beaten up, allegedly by the village mukhiya's supporters, and the audit was stopped mid-way. In March 2013, Thakur was shot dead. No one has yet been arrested for the murder.

THE AADHAAR LINK

 JOB CARDS


Job cards kept by a strongman in Muhammadpur panchayat of Vaishali district. Across Bihar and Jharkhand, a majority of passbooks and job card are kept by the village mukhiya's men or contractors

"How will direct transfers help? The workers do not even know they have to keep the cards or passbooks with them" Wakil Khan, Social Activist, Gumla, Jharkhand
Nearly two years ago, the government started a pilot project in a few states, including Jharkhand, to link workers' bank or post office accounts with their unique biometric identification Aadhaar numbers. The aim of the exercise was to weed out corruption in MNREGA by eliminating fake beneficiaries. Under the new system, beneficiaries depend on business correspondents to withdraw money. These bank-appointed agents carry a hand-held device called Micro ATM to request a withdrawal. After verifying their identities via fingerprint checks, the correspondent gives cash to the workers. But, this system also leaves scope for corruption, say activists in Jharkhand. The transaction receipts the illiterate workers get from the device are in English, so they are clueless about the details mentioned on it. Moreover, the receipts become illegible in no time. Also, the automated voice transaction notification from the machine is barely audible.

Gurjeet Singh, an activist with civil society group Jharkhand NREGA Watch, says instances of business correspondents asking for Rs 100 bribe from a group of eight to 10 workers have come to their notice. Jharkhand Chief Secretary R.S. Sharma says, however, that the Aadhaar-linked system, once fully operational, will allow beneficiaries to switch business correspondents if someone is seeking bribes to disburse their wages.


USHA DEVI and ABHIJEET KUMAR

The wife and son of Ram Kumar Thakur have been living in fear ever since the RTI activist was murdered in March 2013 for highlighting embezzlement of funds from welfare schemes in Ratnauli village of Bihar

"Even if panchayat committee members seek information on welfare spending, FIRs are lodged against them", says Anil Kumar Bhagat, RTI activist, Vaishali district, Bihar
Many villagers say the new payment system is helpful, but some complain about delays when the device does not work due to technical problems. Civil society activists and government officials agree that rural areas lack infrastructure such as Internet connectivity and electricity to support the new system.

Reetika Khera, a development economist, says Aadhaar is not sufficient to prevent corruption. She cites the example of a pilot project based on Aadhaar to disburse subsidised food to beneficiaries in Andhra Pradesh's East Godavari district. She says 13 per cent transactions in the pilot happened through the manual override mechanism where a mobile number is entered into the hand-held device and a one-time password is sent to the phone. The transaction is completed after entering the password in the device. "The moment there is a manual override it means the whole system is collapsing."

Critics also say Aadhaar cannot prevent fraud in cases where money is deposited into the accounts of people who enroll for MNREGA projects but don't actually work.


THE AADHAAR-LINKED PAYMENT SYSTEM

A business correspondent helps MNREGA workers at a service centre in Dohakatu panchayat, Ramgarh district, Jharkhand, withdraw wages from their Aadhaar-linked bank accounts using a hand-held device.

"A new set of intermediaries will be created in the form of business correspondents and middlemen can connive with them", says Balram, Activist with Jharkhand MNREGA Watch.
Officials at Unique Identification Authority of India (UIDAI), which issues Aadhaar cards and maintains a national database, admit there is currently no way to verify if the beneficiary who gets the money has actually worked. But they also say that Aadhaar has weeded out several fake and duplicate beneficiary accounts. Think-tank National Institute of Public Finance and Policy estimates that five per cent of the leakages can be plugged through wage disbursement using Aadhaar-enabled bank accounts.

Ashok Pal Singh, Deputy Director General, UIDAI, says the best use of Aadhaar will call for process engineering from top to bottom. He says that MNREGA job cards should be issued on biometric authentication and attendance at worksites be marked with biometrics. The job cards and attendance sheets will then capture the work hours and days and send payment schedules automatically. Money can then be credited directly into the accounts of the beneficiaries and withdrawn through biometric authentication. "It will minimise the role of middlemen and muster rolls cannot be fudged," he says. But implementing such a mammoth system requires a lot of financial and technical resources as well as trained manpower. Above all, it will require political will. That's something which isn't easy to find.

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