Now, 3.5 cr savings accounts for NREGA, 1.7 cr with post offices

In one of the biggest initiatives for financial inclusion in recent times, more than 3.5 crore savings accounts have been opened with post offices and banks across the rural belt in the country for ensuring the payment of wages under the National Rural Employment Guarantee Act (NREGA).

The ministry of rural development had urged the state governments to stop cash payment of wage to the workers under NREGA at the earliest for stopping irregularities and preventing delay in payment of wages. The rural development ministry has requested the finance and communication ministries to expedite the opening of savings accounts with banks and post offices respectively.

According to data accessed from the rural development ministry by FE, till August, more than 1.8 crore savings accounts had been opened with banks, while 1.7 crore savings accounts have been opened with post offices. ?We have urged states to stop cash payment of wage, there is possibility of another three crore accounts to be opened up over the next few months,? Rita Sharma, secretary, ministry of rural development told FE .

During 2007-8,Rs 10,738.47 crore was paid as wages, under NREGA, to more than 3.3 crore households out of the total expenditure of Rs 15,856.89 crore, when the UPA?s flaship anti poverty programme was in operation in 330 districts.

Sharma said out of the total wage payment of Rs 9000 crore during the current year, Rs 3000 crore has been paid through savings accounts. However, despite a special drive by the various states governments, only about 37% of wage under NREGA was paid through savings accounts till August. While states like Karnataka, Kerala & Andhra Pradesh have stopped cash wage payment, states like Uttar Pradesh, and Madhya Pradesh are lagging behind in opening accounts.

The data complied by the rural development ministry indicates that out 1.7 crore new savings accounts opened with post offices, more than 1 crore accounts have been opened in Andhra Pradesh for payment of wage under NREGA. Rajasthan has opened more than 27 lakh accounts while 14 lakh accounts have been opened in Jharkhand.

Under the memorandum of understanding signed between the department of post and the rural development ministry, the payment of wages to workers under the NREGA must be done within the statutory time of 15 days after the work is done. The rural development ministry would pay an advance of Rs 50 per account prior to the opening of an account.

However, in a state like Uttar Pradesh, out of Rs 6200 crore paid as wage only Rs 1200 crore (19%) paid as wage under NREGA through savings accounts till August during current fiscal, More than 30 lakh savings accounts have been opened with banks for NREGA workers while only 66808 accounts have been opened with post offices.

Bihar too, lags behind in opening accounts for NREGA beneficiaries. Official data said that in only 19 lakh accounts have been opened with the banks and post offices in Bihar till August while 5% of wage paid under NREGA is through these accounts.

States like Uttaranchal and Orissa have been paying 89% & 70% of the wage respectively through savings accounts, the states like West Bengal, Madhya Pradesh & Chhattisgarh have paid only 5.6%, 6.1% & 1.9% of wage under NREGA.

Every person under NREGS is entitled to wages at the minimum wage rate fixed by the state government. The payments are made on a weekly basis on a pre-specified day of the week in a gram panchayat.

Sharma also said that in order to facilitate the electronic transfer of money, the department of posts, in collaboration with state-owned National Informatic Centre and Bharat Sanchar Nigam Limited (BSNL), is working out the modalities.