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Mainstream, Vol XLVI, No 17

Dismal Experience of NREGA : Lessons for the Future

Monday 14 April 2008, by Ruddar Datt


The National Rural Employment Guarantee Act came into force on February 2, 2006 and was implemented in 200 of India’s most backward districts. The Ministry of Rural Development described it as a revolutionary measure to transform the rural economy. In 2007, it was extended to another 130 districts and with effect from April 1, 2008, the Act is to cover all districts.

For its progress and the weaknesses during its implementation, two kinds of reviews are available– (i) the implementation of the NREGA has been reviewed by the Comptroller and Auditor General (2007) and (ii) certain NGOs, especially the National Consortium of Civil Society Organisations (CSOs), have also undertaken several reviews.

The CAG Report underlines the fact that the guidelines indicated in the NREGA have not been followed. The Report specifically mentions lack of provision of professional staff to implement the scheme.

(1) Lack of professional staff: Every State Government was required to appoint in each block, a full time Programme Officer, exclusively responsible for the implementation of the NREGA. The State Government, however, directed Block Development Officers (BDOs) to take “additional charge” to implement the NREGA. The CAG Report finds that 19 States had not appointed these officers in 70 per cent of the blocks surveyed. The point which needs to be highlighted is that the NREGA is not a programme that can work of on “additional charge”.

Besides, one Employment Guarantee Assistant (ESA) was to be appointed in each gram panchayat. According to the CAG Report, 52 per ent of the 513 gram panchayats surveyed had not appointed the ESA.

In addition, the State Governments were to create panels of accredited engineers at the district and block levels. They were expected to carry out costing of works to be undertaken, to make measurements of the works done to release payments to labour as stipulated in the NREGA. The CAG found that the panels were missing in 20 States it surveyed.

As a consequence of shortage of staff, there were delays in execution of works and payment of wages on account of lack of measurements; two-to-three- month delays in payment of wages were noticed. Consequently, labour households preferred to undertake other jobs, even if the payments were relatively low, but prompt.

All this resulted in a situation where out of 20.1 million households employed in the NREGA, only 2.2 million (that is, 10.5 per cent) received the full 100 days employment and wages as promised by the Act. The average employment per household was 43 days in 2006-07 and 35 days in 2007-08, as revealed by the Ministry of Rural Development.

(2) Lack of proper project planning: The NREGA specifically mentions the creation of durable productive assets, in the form of roads, improving rural infrastructure, drought-proofing, watershed development, water conservation etc. The survey found that the focus is on rural connectivity and wells. Other meaningful projects for rural transformation were conspicuous by their absence.

(3) Bureaucratic resistance to NREGA: The CSO found that whereas the Panchayati Raj Institutions leaders are keen to implement the NREGA, Secretaries and Executive Officers of gram panchayats were seen to be working overtime to convince these leaders of the “perils” of getting entangled in the NREGA. On account of the detailed procedures and rules under the NREGA, an impression has been created that it is much more difficult to make money under the NREGA. Given the relatively few chances of corruption, it is better to go in for other programmes that are relatively less strict. In Rajnandgaon district, Chhattisgarh, according to NGOs’ reports, “sarpanches fear that getting work done under NREGA is tantamount to going to jail and that the unemployment allowance will have to be given out of the sarpanch’s pocket”.

(4) Lack of transparency and absence of social audit: Although the NREGA has provisions for transparency in the process of implementation, in actual practice, data on the work done and payments made for various kinds of jobs is kept as a closely guarded secret. As a consequence, there is a mockery of social audit. Even some of the fake NGOs are prepared to verify social audit by charging a ridiculously low fee per panchayat. As a result, the most radical provisions of the NREGA are violated with impunity.

(5) Inappropriate Rates of Payment: The NREGA stipulates that projects shall not be implemented by employment of contractors, because contractors do not pay labour statutory minimum wage and get most of the work done by machines. Muster rolls are faked, labour is underpaid, bogus workers are shown as paid workers while the actual work is done by machines. The schedule of rates is not observed in practice. Studies by NGOs reveal that Employment Guarantee Assistants (EGAs) employed by panchayats themselves work as contractors. Besides, in Chattisgarh, the study of 50 per cent of the NREGA works supposed to be implemented by rural labourers and other staff are invariably found using machinery.

THE CAG Report (2007) has brought out glaring deficiencies of the NREGA in the following words:

The main deficiency was the lack of adequate administrative and technical manpower at the block and gram panchayat level. The lack of manpower adversely affected the preparation of plans, scrutiny, approval, monitoring and measurement of works, and maintenance of stipulated records at the block and gram panchayat level. Besides affecting the implementation of the scheme and provision of employment, this has also impacted adversely on transparency, and made it difficult to verify the provision of the legal guarantee of 100 days of employment on demand. Planning was inadequate and delayed, which resulted in poor progress of works. Systems for financial management and tracking were deficient, with numerous instances of diversion/ misutilisation, and delay in transfer of state share. … Maintenance of records at the block and gram panchayat level was extremely poor, and the status of monitoring, evaluation and social audit was also not up to the
mark. [CAG (2007), Draft Performance Audit of Implementation of NREGA, p. 95]

Besides these deficiencies which require remedial action, the NGOs also found in their studies that wherever social mobilisation of rural workers was successful, public pressure led to improved implementation of the scheme, reduction in the use of contractors and machines, reduced corruption in bureaucracy and also resulted in better payment of minimum wages. Obviously, continuous mobilisation of the rural poor is a basic necessity for securing the intended benefits of the NREGA.

A study by the Centre for Environment and Food Security (CEFS) about the progress of the programme in Orissa revealed that the government had claimed that out of a budgetary provision of Rs 890 crores for 2006-07, the State Government was able to utilize Rs 733 crores (that is, 82.4 per cent). As a result 57 days of wage employment was provided during the year. Not a single household was denied wage employment in 19 NREGS districts. The government also claimed that 1.54 lakh families in the State completed 100 days of wage employ during 2006-07.

However, the research team of the CEFS revealed the hollowness of these claims. Out of Rs 733 crores spent under the NREGS, more than Rs 500 crores was unaccounted for, probably siphoned off and misappropriated by government officials. The research team also found that not a single family in the 100 sample villages was able to secure 100 days of wage employment. Very few families got 20-40 days, the rest mostly between five and 20 days, if at all. Fake job cards and fabricated muster rolls exaggerated the benefits of the scheme. The social audit was non-existent. Thus, the ground reality was highly distressing despite tall claims of the government of the success about the NREGS implementation.

At the same time, it also necessary to take the following measures to strengthen the support structure of the NREGA.

(i) Appointing full-time professionals for implementing the NREGA at all levels which is vitally necessary to implement the scheme.

(ii) Provision of full-time employment guarantee assistants at the panchayat level to make the rural people aware of the benefits of the scheme and induce them to take advantage of the scheme.

(iii) Specific efforts should be made to reduce the time gap between work done and payment received by the rural labourers in the NREGA.

(iv) To use the Management Information System (MIS) and improve the system of monitoring of the scheme as also to check leakages and misappropriation of funds.

(v) To undertake a massive programme of generating awareness about the scheme with the help of information technology.

(vi) To revise the schedule of rates periodically so that changes in the statutory minimum rates of wages are made consistent with their revision.

(vii) To prepare a shelf of projects at the district levels with the help of Programme Officers and other technical staff as well as the Panchayati Raj Institution leaders so that projects cleared at the district level can be implemented at the grassroots level.

(viii) To make a study of various States with a view to learning from their experience of implementing the NREGA and thus develop a spirit of competition among the States to take advantage of the scheme.

(ix) The NREGA payments should be made through post-office accounts. Andhra Pradesh Government has made use of this method. The State had six lakh accounts till 2005. By 2008, the number of accounts jumped to 70 lakhs and the authorities are being forced to strengthen the postal infrastructure so that it can handle the new responsibilities. This can also limit to a large extent fake muster rolls and corruption in the scheme.

(x) The NREGA is a comprehensive employment programme. This implies that other employment generation programmes should be merged with it so that the alternative of shifting to another attractive programme from the point of view of misappropriating funds is closed. This will also help to rationalise various employment generation programmes.

The report card of the UPA Government towards the implementation of the NREGA reveals that as against the budgetary provision of Rs 10,800 crores for 2007-08, the actual utilisation was of the order of Rs 4196 crores, that is, only 39 per cent of the budgetary provision. This is really a sad commentary on the implementation of a flagship programme of the UPA Government.

There is no denying the fact that the NREGA is conceptually a very important national programme initiated at the level of the Central Government, but its record of implementation reveals that there are widespread complaints of corruption and pilferage of funds and very low level of utilisation of the budgeted provision. It has not succeeded in creating sufficient productive assets for strengthening the rural infrastructure. It has, therefore, failed to impact on the poor rural households and if deterioration is not checked, the programme will lose the enthusiasm and momentum generated for it in 2006, describing it as a revolutionary project to impact on the life of the poor.

The author, a well known economist, is a Visiting Professor, Institute of Human Development, New Delhi.

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