Analysis of Payment Delays and Delay Compensation in MGNREGA: Findings Across Ten States for Financial Year 2016–2017

Abstract

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides 100 days of work in a year for every rural household at a minimum wage. Because of MGNREGA, for the first time in the country, a transaction-based management information system (MIS) has been made available in the public domain, a feather in the cap of transparency. An essential safeguard in MGNREGA is delay compensation to be paid when workers do not receive wages within 15 days of completion of work. Despite several attempted measures, payment delays are rampant and the method of calculating delay compensation is flawed leading to massive under-calculation of the true payable compensation. By analysing over 90 lakh transactions for the financial year 2016–2017 across 10 states, we observe that only 21% of the payments were made on time and the central government alone was taking an average of over 50 days to electronically transfer wages. On aggregate, in our sample, while the true total delay compensation payable is about Rs. 36 crores, only about Rs. 15.6 crores is being calculated in the MIS. The Ministry of Rural Development (MoRD) has acknowledged the correctness of the findings and the Supreme Court of India has also issued Orders to the MoRD based on these findings.