Uttar Pradesh to transfer NREGS funds directly to panchayats

Written by Tarannum Manjul | Lucknow | Updated: Jan 3 2010, 03:41am hrs
To tackle the problem of delayed payment of wages under the National Rural Employment Guarantee Scheme (NREGS), the UP government will start direct transfer of funds to all the 52,716 panchayats, instead of the existing practice of routing these through districts. This is expected to speed up payments by two months.

The department of rural development on Thursday transferred funds to panchayats in six districts. By January 5, at least the first installment would be sent to every panchayat, said an official.

We are a big state with the biggest NREGS budget. But the three-tier system was taking a lot of time and none of the panchayats was able to make clearances on time. The delay in clearances resulted in late beginning of the second line of projects, hence delaying the entire programme. We are sure that this direct transfer system will go a long way in streamlining financial utilisation of NREGS funds in the state, said principal secretary (rural development) Shrikrishna.

Under the three-tier system of disbursing funds, the Centre transfers the NREGS funds to the state government which in turn sends these to the districts from where the funds are transferred to gram panchayats. The district magistrate, chief development officer and the district rural development authority are authorised to transfer money to panchayat accounts. The process is time-consuming and is believed to be the main cause of delayed payments.

UP is the first state where the new system will be introduced across the state in one go. It was first introduced in a small way in Karnataka in June, and is being gradually extended to cover the entire state. With the work of disbursing funds taken away from them, the district authorities will now function as monitors, keeping a check on fund utilisation. It will ensure that all the panchayats have accounts in nationalised banks.

Many panchayats have accounts with co-operative banks and there have been complaints of irregularities. The rural development department is in talks with banks to bring the panchayats under the core banking cover for quicker transfer of funds.