Despite managing to open a record number of savings accounts for payment of wages to workers under the National Rural Employment Guarantee Act (NREGA), the government feels that there is a need to make changes in the Act itself to make cash payments of the wages illegal.
Perturbed by delays in opening of savings accounts by many states, the rural development ministry has now forwarded the proposal to incorporate changes in the schedule of NREGA, 2005 to the ministry of law and justice for issuance of final notification. The ministry believes that cash payments would deal with the problems of irregularities to a large extent.
For the past six months, the rural development ministry, in collaboration with the finance ministry and the department of post, had been lobbying with state governments to expedite opening of savings bank accounts with post offices and banks in rural areas to stop cash payment of wages altogether.
After the law ministry gives its nod, wages under the NREGA would be paid to workers only through their savings accounts. ?We are making it mandatory for each state to pay wages through only savings bank accounts,? rural development minister Raghuvansh Prasad said.
Although Prasad is eager to ensure that all the estimated 5 crore families to be provided jobs under the scheme get their savings bank accounts, there are many states like Bihar, Chhattisgarh, West Bengal, Uttar Pradesh and Madhya Pradesh which have been slow in opening accounts. Data indicate that only 10% of the wages to workers under the NREGA is paid through savings bank accounts in West Bengal. In case of Uttar Pradesh, Madhya Pradesh and Bihar, the figures are 53%, 11% & 19%, respectively.
At the same time, states like Karnataka, Andhra Pradesh, Himachal Pradesh, Kerala and Uttaranchal have virtually stopped cash payment of wages by providing banking facilities to all workers under the scheme. Even in states like Jharkhand, Rajasthan and Orissa, the percentage of total wages being paid through bank accounts are 76%, 72% and 67%, respectively.
According to latest data, more than 5.7 crore savings bank accounts have been opened in rural areas with banks and post offices, which is being termed as the world’s biggest financial inclusion initiative. Around 2.5 crore savings bank accounts have been opened with post offices and 3.2 crore accounts with banks for NREGA wage payments.
Launched in February 2006, NREGA aims at enhancing livelihood security by providing atleast 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. Since its launch, the UPA government has spend Rs 40,000 crore under the scheme till date, out of which around Rs 29,000 crore has been paid as wage to estimated 5 crore families.
For regions without any banking facilities, the rural development ministry is testing models like ?business correspondent? or ?smart card? to ensure workers access banking services.
Under an MoU signed between the department of post and the rural development ministry, payment of wages to workers under the NREGA must be done within the statutory time of 15 days after the job is completed. The rural development ministry at present pays an advance of Rs 50 per account prior to the opening of saving accounts.