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India: Scrap 31 March Deadline, Restore Flexible Payment System for MGNREGA | NREGA Sangharsh Morcha - Press Release, March 30, 2023

30 March 2023

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Scrap 31 March Deadline, Restore Flexible Payment System for MGNREGA

PRESS RELEASE: 30th March 2023 by NREGA Sangharsh Morcha

The Ministry of Rural Development (MoRD) threw a veritable grenade at MGNREGA on 30 January 2023, when it made the Aadhaar-based Payment System (ABPS) compulsory for MGNREGA wage payments from 1 February – just two days later. At that time, a little over 40% of all MGNREGA workers were “eligible for ABPS” according to the Ministry’s own data (MIS Report R1.1.9). Thus, from 1 February a majority of MGNREGA workers became “unpayable”.

This was a recipe for disaster, as the Ministry must have realised fairly quickly, leading to an extension of the deadline from 1 February to 31 March. Presumably, the Ministry’s assumption was that this would give MGNREGA workers enough time to satisfy the requirements of ABPS eligibility, including “linking” their bank account with Aadhaar. As anyone familiar with the ground realities would have predicted, nothing of the sort happened: today, the proportion of MGNREGA workers eligible for ABPS is still below 50% (see Table below).

The reason is that for many MGNREGA workers, satisfying these requirements is very cumbersome.

Until now, MGNREGA had a flexible wage payment system with two payment options: “account-based” payments (i.e. ordinary bank payments) and “Aadhaar-based” payments (i.e. the ABPS). The Ministry has never explained clearly why the account-based option should be discontinued. The ABPS is a complex, cumbersome and unreliable system that has caused severe problems in the last few years. There is no case for making it compulsory.

Making it compulsory when so many workers are not ready for it is an abominable injustice: it means that many MGNREGA workers are at risk of not being paid, as has already happened at scale. If workers have no reasonable assurance of being paid, the entire programme could collapse.

- All registered MGNREGA workers (million) Active MGNREGA workers (million)
Total 279 150
“Aadhaar seeded” 206 (74%) 143 (95%)
Successfully authenticated 163 (58%) 120 (80%)
Eligible for ABPS 137 (49%) 104 (69%)

Source: MGNREGA MIS, Report R1.1.9, 28 March 2023.

Attached is the charter of demands from NREGA Sangharsh Morcha.