India’s Big Government
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k) At the block level, the programme officer acts as the coordinator for the MGNREGS. A block is a subdivision of a district. Typically, the block development officers are designated as programme officers as well. One of the major responsibilities of the programme officer is to ensure that wages are paid to all labourers who participate in the MGNREGS. It is also his responsibility to ensure that unemployment allowance is paid if the employment is not offered on time. He also needs to ensure that the surveys to estimate work demand are carried out. At the same time, he needs to maintain a proper record of the resources received, released and spent under the MGNREGS in his block. He also needs to receive the project proposals from the Gram Panchayats, consolidate them into a block plan and pass them on to the District Panchayat.831
Over and above this, the programme officer needs to liaison with banks and post offices and help in the opening of new accounts. He needs to ensure that timely payments are made to the labourers and that any grievances are redressed within seven days.
l) The other important functionaries in the MGNREGS are the Gram Rozgar Sahayaks (GRSs) (employment guarantee assistants) and mates, or worksite supervisors. The GRSs essentially run the MGNREGS in a village. They are responsible for overseeing the process of registration, the distribution of job cards and the allocation of work to villagers who have applied for work. They need to facilitate Gram Sabha meetings themselves. Over and above this, it is the GRS’s responsibility to record the attendance of the labourer every day at the worksite, either himself or working through the mate. The mate, on the other hand, is supposed to be a worksite supervisor. The Act mandates at least one mate to be present for every 100 workers. At the same time, the mate cannot be a worker at the same worksite at the same point of time.832
The mate is the last line of the government interacting with the workers on a regular basis. Other than supervising workers, he needs to record daily attendance on a muster role, update entries in job cards, ensure that there is no free-riding within the group of workers, help illiterate labourers in his group to learn to sign and to calculate wages earned, and create awareness about workers’ rights under the MGNREGA, among other things.833
The information of the work carried out, which is recorded in muster roles by the GRSs or the mates, is sent to the block offices, where it is digitised. The state governments as well as the central government reimburse local governments on the basis of these electronic records.834
m) The Act also clearly specifies that the labour budget should form at least 60 per cent of the total works to be taken up by the Gram Panchayat. The material cost cannot be more than 40 per cent. This ratio needs to be maintained at the block level as well. Over and above this, a maximum of 6 per cent is allowed as an administrative cost. At least a third of this amount needs to be used at the Gram Panchayat level to employ and pay the GRSs and meet other administrative expenses.835
n) The Act also specifies the kind of works that should be carried out. This includes water conservation and water-harvesting structures to improve groundwater supplies, micro- and minor irrigation works, renovation and maintenance of drains and irrigation canals, land development works on common land, etc. The Act also allows rural sanitation works, such as individual household latrines, school toilet units, etc. Rural roads to unconnected villages and pucca internal roads can also be constructed. Construction of buildings for Gram Panchayats, cyclone shelters, village haats and crematoria are also allowed.836
In fact, there is a list of negative works as well, i.e., works that are not allowed under the Act. This includes works like removing grass and shrubs, agricultural operations, etc., which are essentially works which are not measurable. Nevertheless, these works are allowed if they are a part of converting uncultivable/barren land into cultivable land. They are only not allowed as stand-alone activities.837
Furthermore, the asset being built through the work carried out needs to be durable and it needs to be constructed conforming to sound engineering standards “in terms of design, materials and workmanship”.838
o) The worksite should have facilities like the availability of drinking water, a first-aid box and shade for periods of rest. If the number of women working at the worksite and accompanied by children is five or more, then there should be a woman worker available to look after the children.
p) As far as payments are concerned, the Act specifies that the payment of wages against the work carried out should be made into the bank accounts or the post office accounts of the labourers. If the penetration of banks or post offices in a particular area is weak, then payments can also be made in cash. The Act specifies that every attempt should be made to video record the cash payment process. It is up to the wage seeker which kind of account (scheduled commercial banks / regional rural banks / post offices / mobile banks) he or she wants. The payment of daily wages needs to be carried out on a weekly basis and not later than a fortnight “after the date on which the work has been carried out”.839 In the case of any delay in the payment of wages, a compensation of 0.05 per cent of the unpaid wages per day will have to be paid from the sixteenth day onwards.
Furthermore, Paragraph 31 of the Act mandates that there shall be no discrimination in the payment of wages on the basis of gender. In fact, this clause was supposed to empower women. Before the MGNREGA was passed, the state of Maharashtra had an Employment Guarantee Scheme (EGS). Several studies have been carried out on Maharashtra’s EGS. One of the studies concluded that the payment of equal wages to men and women was a major reason why the scheme was so popular among women labourers. Another study concluded that the equal payment gave women a taste of freedom and that helped them develop a sense of confidence.840
The economist Jean Drèze, writing in an essay titled ‘Employment Guarantee and the Right to Work’, felt that the MGNREGA would play a significant role in curbing gender discrimination as well as empowering rural women, especially in states like Bihar and Uttar Pradesh, where women are traditionally homebound.841
q) The accounts of the MGNREGS at the district level are supposed to be audited by Chartered Accountants (CAs). The CA firms are supposed to identify gaps and make suggestions for improvements. They also need to certify whether the funds allocated to the MGNREGS have been spent on only admissible activities.
r) At the Panchayat level, a social audit needs to be carried out. This audit has to be carried out by people in coordination with the local administration. The social audit includes an audit of the quality of the work being carried out along with the number of labourers employed as well as the materials that are used. It needs to be conducted at least once in every six months. Once the audit is done, the Social Audit Gram Sabha is supposed to be video recorded and uploaded onto the web.842
At the local level, the Act also proposes a Vigilance and Monitoring Committee. This committee should consist of ten members, five of whom shall be women. Over and above this, the committee should also have members from the scheduled castes and scheduled tribes in proportion to their population. The basic function of this local-level vigilance committee is to act as a forum for a concurrent social audit. Other than the local-level vigilance committee, a district-level vigilance cell and a state-level vigilance cell are also supposed to be in place. The state-level vigilance cell is supposed to conduct regular field visits to detect irregularities. It is also supposed to take suo motu action on reports which appear in the media. The district-level vigilance cell is supposed to carry out the directives of the state-level vigilance cell.843
These were some of the relevant characteristics of the scheme. The reason I have gone into them in so much detail is to show that, just like other Big Government programmes, the MGNREGS is also high on intent and ambition, but it does not take into account the implementation capabilities of the local government.
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A good way to think about the ambitions of Big Government is to think of a funnel which is very wide at the top and very narrow at the bottom. When any progr
amme is being planned at the central government level, each ministry has access to resources which it can call upon to design the scheme and stipulate conditions for the disbursement of money under the scheme. The trouble is that the disbursement as well as the monitoring have to be carried out at the local government level.844 And this is where the ambitions of Big Government start to unravel.
As Sandip Sukhtankar and Milan Vaishnav write in ‘Corruption in India: Bridging Research Evidence and Policy Options’:845
What the relatively small number of public employees [as we have seen in Chapter 1] means for a country of India’s size is that the administrative service has an enormous burden placed on it to not only implement the plethora of schemes and regulations in place but also to enforce them. For example, the chief administrative officer of the most relevant administrative unit for implementing public programmes in India – the district collector – is also the official in charge of law and order in a district, which has an average of 2 million [20 lakh] inhabitants. While these officers are selected from the cream of the crop of the Indian Administrative Service (IAS), given the enormous burden placed on their shoulders, the decks are stacked against them from the beginning. Compounding the administrative burden [that] they face, officers regularly face political interference.
The trouble is that very few states have the administrative capacity to implement the 200 plus schemes sponsored by the central government. Implementing a scheme essentially means accessing the grants, spending the money as per the stipulated conditions, maintaining separate accounts and then submitting reports to the central government. In fact, this capacity is even lower in states which actually need these schemes the most. As Devesh Kapur writes in an essay titled ‘The Political Economy of the State’, what makes monitoring schemes difficult is not just the limitations of the monitors but the “sheer number and dispersion of schemes across communities and locations”.846
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So how has the MGNREGA performed over the years? It has been close to ten years since it was first implemented. The economist Surjit Bhalla calls the MGNREGA the fourth most corrupt institution in the world, after FIFA, BCCI and the Public Distribution System (PDS).847
While FIFA and BCCI are not relevant to this book, we have seen how corrupt the PDS, which the government uses to implement the right to food security, actually is. Bhalla offers more than a few reasons to bolster his argument.
In 2009-2010, which was the first full year that the Act was implemented throughout the country, the Ministry of Rural Development reported that 2.84 billion work-days were created. The number was on the higher side, given that 2009-2010 was a drought year. This claim can be cross-checked because the NSS household survey asked households how many days of work they had got under the MGNREGS. The answer was 1.47 billion days. This is around 51.8 per cent of the 2.84 billion work-days claimed by the Ministry of Rural Development.848
What does this mean? This basically means that a little more than 48 per cent of the days were ghost days. Hence, while the Ministry of Rural Development has all the proof needed to show that some work was done and payments were made, the people who were supposed to have done that work don’t remember receiving those payments.849
Hence, like other Big Government programmes, the MGNREGS also sees a huge leakage. The question is: How does this leakage happen? Officials who are supposed to make payments to workers underpay them. This is basically theft from the beneficiaries. There are other ways as well. Officials often over-report work. How does this happen? As Paul Niehaus and Sandip Sukhtankar write in a research paper titled ‘Corruption Dynamics: The Golden Goose Effect’: “For example, a worker who worked for 10 days on a daily wage project when the statutory minimum wage was Rs. 55 per day might receive only Rs. 45 per day in take-home pay. The official might report that the worker had worked for 20 days rather than 10. His total rents would then equal 55 × 20 − 45 × 10 = 650 rupees, the sum of the two sorts of theft.”850
In both the cases, the officials in charge of running the scheme (the programme officer, the GRSs, etc.) siphon off the money. Over-reporting is the most prevalent form of leakage, given that it deals with siphoning off money from a distant taxpayer. There are basically two forms of over-reporting of the work carried out under the MGNREGS. One is reporting in the names of ‘ghost’ workers, who do not exist but against whose names work is reported and, over and above that, against whom payments are made. At the same time, there are ‘quasi-ghost’ workers as well. These are people who exist and who haven’t been given any work but against whose names work is reported and payments made as well.851
When it comes to over-reporting work, the genuine workers have no interest in reporting the fraud. As Niehaus and Sukhtankar point out:852
A key difference between theft from beneficiaries and theft from taxpayers lies in the way they are monitored. Underpaid workers who know they are underpaid could either complain to someone at the block or district headquarters or simply leave for the private sector. On the other hand, workers have less incentive to monitor over-reporting because the programme’s budget is not fixed: a rupee stolen through over-reporting does not mean a rupee less for the workers.
The interesting bit is that, as per the MGNREGA, the labour budget needs to be at least 60 per cent of the total expenditure. In practice, it is substantially higher.853
The question is: How do officials manage to carry out such a fraud? In the case when payments are made in cash to workers, it is very straightforward. The worker is simply paid a lesser amount. He can obviously complain against this. But anyone who has seen how any Indian system works would take what he gets and consider the rest as the cost of the payment that was made.
As Niehaus and Sukhtankar write in another research paper, titled ‘The Marginal Rate of Corruption in Public Programs: Evidence from India’:854
The first point of appeal is the Program Officer, a block-level role typically played by the Block Development Officer (BDO); further appeals go to the district Programme Coordinator, a role played by the District Collector. Both the BDO and the Collector are appointed bureaucrats from the state or national administrative service. By rule, these officials should accept grievances on standardised forms and issue receipts so that the petitioners can follow up. How effectively this system functions in practice is an open question.
But things are not so straightforward when payments are supposed to be made into post office accounts, or even bank accounts for that matter. How do things operate in such a situation?
There is an excellent example in the context of Jharkhand. The siphoning off of money happens when the middlemen, the officials who run the MGNREGS, the elected functionaries (i.e., the members of the Gram Panchayats), local officials and the postmasters (if the payment of wages is through the post offices) all come together.855
It will soon become clear why the postmaster is a very important part of the process and why, without him being a part of the process, the scam cannot be carried out. In July 2014, a case of corruption was brought to light in the Murhu block of the Khunti district in the state of Jharkhand. The muster rolls were fudged, and fake names to which the carrying out of work had been assigned had been added to them. Post office accounts were opened against these fake names and money was credited into them. This amount was then withdrawn by the middlemen in connivance with the postmaster.856
Hence, if the postmaster hadn’t been a part of the fraud, the money being deposited into the fake accounts couldn’t have been withdrawn. In Jharkhand, 70 per cent of the MGNREGS workers’ accounts are still in post offices, which have fairly weak norms of accountability at the lower levels.857
This scam was brought to light by Ankita Aggarwal in a research paper titled ‘The MGNREGA Crisis—Insights from Jharkhand’. As she writes: “The gram rozgar sevak [i.e., sahayak] participated in the scam by signing the fudged muster rolls and the junior engineer manufactured an inflated measurement book. Block-level officials and elected repre
sentatives may also be responsible, as the work was implemented by the panchayat samiti.”858
We have seen a few examples of how the funds allocated under the MGNREGA get siphoned off in a few places. In fact, there are many other examples of MGNREGA funds being siphoned off in different parts of the country. There are also many examples of the MGNREGA not being implemented the way it is theoretically supposed to be. Here are a few examples:
a) In 2015, in the Palamu district of Jharkhand, another example of corruption was uncovered. In this case, the work was carried out by machines. This is something, as stated earlier, which is not allowed under the MGNREGS. The work has to be carried out by the labourers alone, and machines are neither allowed to be bought or hired using funds allocated to the scheme. A large-scale demand for work was made using quasi-ghost workers. The interesting thing was that wages had to be paid after fingerprint authentication of the workers. Hence, the workers were made a part of the scam as well. All they needed to do was to come to the branch, verify their identity, collect the money, take their token cut, and hand over the bulk of the money to those carrying out the scam.859
The point is that even technology (fingerprint authentication in this case) is no guarantee against those determined to carry out a scam.
As mentioned earlier, the labour budget has to be at least 60 per cent of the total expenditure. The remaining money can be spent on procuring material to build. This material needs to be procured only from registered suppliers. But in Jharkhand, it is usually procured from unregistered suppliers. The unregistered suppliers pay a commission to registered suppliers to get a bill from them, which is then submitted to the administration for reimbursement. Furthermore, since the unregistered suppliers also need to make money in the process, the total amount of material supplied is lower than that for which the bill has been made. This leads to the work remaining incomplete or being poorly attended to.860