How safe are NREGS wage payments through banks and post offices?
Please get my recent piece on the loopholes in bank and post office payment system under NREGS carried in Infochange in its February 2009 issue
The title of the piece is :How safe are NREGS wage payments through banks and post offices?
Your rich feedback is most welcome. -- With Regards,
Pradeep Baisakh Journalist
When the government decreed that all payments to beneficiaries under the National Rural Employment Guarantee Act would be made through banks and post offices it thought it had plugged the leaks in the system. But bank accounts too can be manipulated, as a social audit carried out in Karon block in Jharkhand state showed
The success of the National Rural Employment Guarantee Act (NREGA) depends on its beneficiaries getting the wages due to them, and doing so on time. Provisions for maintenance of muster rolls and job cards, payment of wages in front of all the labourers, providing access to all government records, and social audits are aimed at achieving exactly this.
However, as this gigantic employment guarantee scheme unfolded across the country, it was observed that muster rolls and job cards were being grossly manipulated by the implementers of the scheme to siphon off a large proportion of money from the wage component. (Money from the material component is also diverted.) To end this loot of public money, it was decided to pay the wages through banks and post offices rather than direct payment of cash to the workers.
What was overlooked was the fact that bank records could also be manipulated; if muster rolls and job cards -- both government records -- can be manipulated, so too can bank and post office passbooks. A recent social audit in Karon block, Deoghar district in Jharkhand showed just how vulnerable the system is.
The social audit was conducted in five gram panchayats of Karon block in mid-October 2008 by the Mazdoor Kisan Samiti (MKS), a local organisation, together with researchers from the G B Pant Social Science Institute, Allahabad. In a startling revelation, and to everyone's horror, it was found that signatures on withdrawal slips were forged to access money in the beneficiaries' accounts in banks and post offices alike, without the beneficiaries' knowledge.
In Ranidihi gram panchayat of Karon block, a well for irrigation purposes was sanctioned on the land of Koka Baori under NREGS. The audit revealed that the muster rolls were forged, and money was withdrawn from the bank accounts of the people who worked on the project, without the latter's knowledge, by Naval Singh, the contractor, and Gopal Choudhury, chairperson of the Central Cooperative Bank in connivance with Umesh Singh, the panchayat sevak and N K Das, the manager of the bank.
Naval Singh, the main culprit, got the well sanctioned by the panchayat. It was to be dug on the land of Koka Baori, a poor dalit. Singh recruited labourers from outside the village, and the family members of Koka Baori also got some minimum amount of work. The muster roll, however, recorded only the names of Koka's family members and his neighbours. Bank accounts in the names of these people were opened in the Central Cooperative Bank. The money was withdrawn from these accounts by forging the signatures of the account holders.
Based on these findings, the deputy commissioner, Mastram Meena, immediately ordered that a police complaint be filed against the aforesaid four accused in the scam. During a public hearing, the block development officer, Rajesh Singh, admitted that he was lax in carrying out his responsibilities and ensuring adequate monitoring, thus allowing the scam to occur. He agreed to deposit Rs1,000 as penalty for neglect of duty under Section 25 of NREGA. This is probably the first case where Section 25 of the law was invoked to impose penalty on an authority who failed to implement the provisions of the law.
Many means of manipulation
Anish Vanaik, a surveyor, says there are broadly three ways in which payment through banks and post offices ca be manipulated. One, signatures are forged and money withdrawn as was done by Naval Singh. Two, the signatures of the account holders are true, but they are taken under false pretences. This may be done at the time of opening the account (or later) when the innocent labourer is asked to put his signature on a form and later the form is misused to withdraw money. Third, the people are taken to the bank or post offices with the contractor/middlemen and they themselves withdraw the money, but then are made to hand over some of it to the contractor. They do this because the contractor gives them the information that the money has been credited to their account, which otherwise they would not know.
This shows how dependent the labourers are on the contractors. In one such case in Tekra gram panchayat, Lacchmi Mahato worked on an NREGS project to dig a well on Indu Mandal's land. Though the full official wage of Rs 86.40 per day was credited to Lacchmi's account, he paid part of it to Indu who decreed that the daily wage was Rs 70 per day.
The culture of 'percentage cuts'
Another scam discovered in the course of social audits is the 'percentage cut' where various government officials and elected representatives share a percentage of the labourer's wage.
Taufique Zarra of Mahuatand gram panchayat in Karon is a victim of this practice. "He got his well sanctioned under NREGS but not without a price. He gave Rs 2,500 to the panchayat sevak initially, and a further 13% in cash to the panchayat sevak and 10% to the overseer on each cheque released," says Sunil, a surveyor. Zarra had to sell his bullock and take a loan at a high interest rate from the market to bribe the officials.
Abbas Mian also got a well dug on his land. He admits that he manipulated the names in the muster roll and filled it with the names of his relatives, and not the actual labourers, so that he could withdraw money from the bank. Kasim, cousin of Abbas Mian explains why this practice is resorted to.
"We have to pay the labourers on time otherwise they will not come to work. But the credit to the bank under NREGS gets in too late. We therefore pay the wages from our own pocket. We keep our relatives' name in the muster roll so that it will be easier for us to withdraw the money from the bank."
The politician-contractor-bureaucrat nexus makes the whole percentage system fairly unchallengeable. People like the contractor Naval Singh, who is also leader of the ruling party, the Jharkhand Mukti Morcha, are difficult to punish because of the political protection they enjoy. This 'PC' culture, as it has come to be known, is the root cause of all the forgery -- earlier with muster rolls and now in bank payments. This has not only eaten into the wages of the poor labourers but is also corrupting people like Taufique Zarra and Abbas Mian on whose land the wells are sanctioned, and who have to forge muster rolls and manipulate the banking system out of compulsion.
The bank payment system has also brought uncertainty for the labourers as they don't know when the wages are credited into their accounts. Sandhya, a surveyor, says, "The bank payment system has not gone down well with people because it functions in a lackadaisical manner. People have to go to the bank two and three times to enquire if their wages have been credited."
This uncertainty has led to the increasing role of middlemen who have access to such information, and makes the innocent labourers quite vulnerable as they think the middleman is doing them a favour by telling them when they can withdraw their money.
The system has also led to delays in the payment of wages. One reason for this is that often it involves inter-institutional transactions (for example, from a bank where the gram panchayat has an account to the banks/post offices where the labourers have accounts). "Since the banking system has not been put in place properly, it has worsened the delay in payment of wages to the workers," says Pankaj Kumar of MKS.
The system is good when it works
Making NREGS payments through banks and post offices is a good idea for several reasons. For one, it separates the implementing agency from the payment agency. So, as against direct payment of cash to the labourers by the panchayat/block authorities (or even contractors), who could keep a share of the money for themselves, in the banking system the money goes directly into the account of the labourers. This would also discourage corrupt authorities from fudging the muster rolls. Moreover, the payment through banks and post offices would promote the habit of saving among rural unskilled workers.
In Andhra Pradesh, the bank and post office payment system has worked quite well. At the time the block office sanctions payment to the bank based on the muster roll, a computerised pay slip is generated which is distributed in public to the beneficiaries in the villages. At the time of distribution, the muster roll details are also read out. The system works well because there is political will to ensure that it does, which is missing in a state like Jharkhand.
In Karon, the system is dysfunctional. Ever since the bank system has been implemented the signature column has disappeared from the muster rolls. "This is a fundamental problem as the labourers have no clue about their workdays and wages. The signature column in the muster roll should immediately be restored," says Prof Jean Drèze, who led the survey team in the Karon audit.
Deputy Commissioner Mastram Meena cites a staff shortage as the major reason for the shortcomings in the implementation of NREGA. "From now on there will be one officer (gram rozgar sevak or panchayat secretary) present during the payment to the labourers from the banks or post offices," Meena said.
While the introduction of payment through banks and post offices could check the prevailing corruption, it is not a foolproof mechanism. Jean Dreze and auditor Reetika Khera say that the transition from the conventional payment system to bank payment requires great caution including strict monitoring of banks and post offices, and must be combined with strict enforcement of all the transparency norms.
Ultimately, though, the essential ingredient for checking corruption and increasing transparency is the people's awareness and assertiveness, which cannot be supplanted by any system however well thought out it may be.