Aadhaar enrollment boosts MGNREGA, cuts delayed payments to low of Rs 67,956 cr in FY18

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNERA) which takes care of livelihood and securities in rural areas, has seen decline in their wage payment methodology. A report of State Bank of India (SBI) Ecowrap revealed that, it  is often reported that MGNREGA programme is marred with problem of delayed payments. Though the data culled from the website reveals a completely different story. MGNERA aims to enhance rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. 

Data of SBI showed, delayed payments, which were as high as Rs 2.38 lakh crore in FY16 had declined significantly to merely Rs 67,956 crore in FY18.

In percentage terms,  a percentage of total payments, the share of delayed payments has decelerated continuously and sharply from 73% in FY15 to 18% in FY18.

Also the share of more than 90 days in delayed payment has also improved materially and the level has declined from 30% in FY13 to 8% in FY18.

Following above, the delayed compensation also declined sharply. From a high of Rs 26.6 crore in FY16, it has now declined to Rs 6.2 crore in FY18.

Although, there was only 18% delayed payments at all-India level, the situation of some of the states is worrisome. 

Apart from 8 N-E States, the big states that have delayed payments more than the national average were Bihar (39% payments were delayed), UP (36%), Punjab (30%), Maharashtra (27%) and Karnataka (23%). Interestingly, 4 out of these 5 states have announced farm-loan waiver in FY18.

Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI said, “We believe, there has been a continuous upsurge in Aaadhaar enrolment in recent years that is enabling the Government to better target the beneficiaries of such payments. For example, the total number of Aaadhaar enrolments that was roughly 600 million in 2015 has now touched 1.18 billion in 2018.”

For the record, there are now 5 times many Aadhaar Authentications daily (64 million) than Card Transactions at PoS (12.7 million), as per SBI. 

Interestingly, 4 out of these 5 states have announced farm-loan waiver in FY18 (Rajasthan has a lower than India average as a debt waiver has only been announced in Feb 2018).

Ghosh said, “It is thus possible that the rural distress in these states have declined with a debt waiver scheme. This is likely to be positive for state finances as the waivers announced by Maharashtra, Rajasthan and Karnataka were outside their budgets (25% share of States).”