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    Corruption in India is a major issue and adversely affects its economy. A 2005 study conducted by Transparency International in India found that more than 62% of Indians had firsthand experience of paying bribes or influence peddling to get jobs done in public offices successfully. In its 2008 study, Transparency International reports about 40% of Indians had firsthand experience of paying bribes or using a contact to get a job done in public office.In 2012 India has ranked 94th out of 176 countries in Transparency International’sCorruption Perceptions Index, tied with Benin, Colombia, Djibouti, Greece, Moldova, Mongolia, and Senegal.Most of the largest sources of corruption in India are entitlement programmes and social spending schemes enacted by the Indian government. Examples include Mahatma Gandhi National Rural Employment Guarantee Act and National Rural Health Mission. Other daily sources of corruption include India’s trucking industry which is forced to pay billions in bribes annually to numerous regulatory and police stops on its interstate highways.Indian media has widely published allegations of corrupt Indian citizens stashing trillions of dollars in Swiss banks. Swiss authorities, however, deny these allegations.The causes of corruption in India include excessive regulations, complicated taxes and licensing systems, numerous government departments each with opaque bureaucracy and discretionary powers, monopoly by government controlled institutions on certain goods and services delivery, and the lack of transparent laws and processes. There are significant variations in level of corruption as well as in state government efforts to reduce corruption across India.Mahatma Gandhi National Rural Employment Guarantee Act

    Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) refers to the world’s largest welfare program, run by theGovernment of India.

    It is a job guarantee scheme for rural Indians. It was enacted by legislation on 25 August 2005. The scheme provides a legal guarantee for at least 100 days of paid employment in every financial year to adult members of any household willing to do unskilled manual work related to public work at the statutory minimum wage of INR120 (US$2.00) per day in 2009 prices. If they fail to do so the government has to pay the salary at their homes. The central government outlay for the scheme was INR4000 billion (US$68 billion) in FY 2010–11.

    This act was introduced with the aim of improving the purchasing power of semi- or un-skilled rural people of India, irrespective of whether or not they fell below the poverty line. Around one-third of the stipulated work force is women. The law was initially called theNational Rural Employment Guarantee Act (NREGA) and was renamed with the prefix “Mahatma Gandhi” on 2 October 2009, Gandhi’s birth anniversary.

    In 2011, the program was widely criticised as no more effective than other poverty reduction programs in India. Despite its best intentions, MGNREGA is beset with controversy about corrupt officials, deficit financing as the source of funds, poor quality of infrastructure built under this program, and unintended counter-productive destructive effects on the rural economy and inflation


    MGNREGA (then known as NREGA) started with an initial outlay of $2.5 billion (Rs113 billion) in year 2006–07. The funding has considerably been increased as shown in the table below:

    Year Total Outlay (TO) Wage Expenditure (Percent of TO)
    2006–07 $2.5 billion 66
    2007–08 $2.6 billion 68
    2008–09 $6.6 billion 67
    2009–10 $8.68 billion 70
    2010–11 $8.91 billion 71

    The Comptroller and Auditor General (CAG) of India, in its performance audit of the implementation of MGNREGA, has found “significant deficiencies” in the implementation of the Act. The plan was launched in February 2006 in 200 districts and eventually extended to cover 593 districts. 44,940,870 rural households were provided jobs under NREGA during 2008–09, with a national average of 48 working days per household, about half the target of 100 working days. In recent times, NREGA workers have faced delays in payment of wages, some of which have been pending for months. In July 2012, the government admitted that the programme is plagued with corruption and it needs to be dealt with meaningfully.

    Employment under NREGAS in 2010
    Indian Minister of State for Rural Development Pradeep Jain said in a written reply to a question in Rajya Sabha that as of 30 June 2010, 17,943,189 families have been provided employment under MGNREGS.

    The MGNREGA aims to achieve twin objectives of rural development and employment. The act stipulates that work must be targeted toward a set of specific rural development activities, such as water conservation and harvesting, afforestation, rural connectivity, flood control and protection such as construction and repair of embankments, etc. Digging of new tanks/ponds, percolation tanks and construction of small check dams are also given importance. Work includes land leveling, tree plantation, etc.

    First a proposal is given by the panchayat to the block office and then the office decides whether the work should be sanctioned. In Rangareddy district, manchal mandal the dry land horticulture and plantation of trees on the bunds of the fields taken up under MGVN programme is taken up in a big way.

    MGNREGA 2.0

    In the 12th five year plan, planning commission has launched MGNREGA 2.0. MGNREGA 2.0 introduces some new approaches for the implementation of this scheme based on the drawbacks reported from various stakeholders.

    Following are the 12th five year plan approach:

    1. Expanded List of Works : The 12th Five year plan proposes to expand the list of works that can be taken up through this scheme. This will give more location-specific flexibility and improve ecological balance in rural areas. Usually Works to be taken up in a particular financial year is decided in the gram sabha meeting. Since the government guideline of the scheme has already listed the type of works to be taken, the options available to the people were restricted. In some places works affecting the ecological balance of that particular place were taken up. This expanded list is expected to satisfy the needs of different terrains and will help in better generation of durable assets. The unit cost and labour:material cost of each work is also specified. The unit cost may vary in different location but the ratio of labour:material cost should be 60:40. This is to prevent more funds being used for labour displacing machinery.

    2. Strengthening the demand-driven character of MGNREGA : The most important feature of MGNREGS scheme is that the work will be initiated only when the wage-seeker demands for work. The old practice of jab kaam khulega, tab kaam milega has to be changed to jab kaam maangege, tab kaam khulega. So in 12th five year plan more importance will be given to record registration of work, job card issuance and application of work. If an officer refuse to accept application of work or failed to give dated receipts for the application it will be considered as a contravention under section 25 of MGNREGA. Under MGNREGS scheme it is mandatory to provide job within 15 days from the date of submission of the job application. Otherwise from the 16th day unemployment allowance has to be given to the worker. Most of the workers were not aware of this provision and so very few workers applied for the job and even if they do so they were not given any receipts for the same.

    3. Labour budget : MGNREGA is a demand-driven scheme. So in order to satisfy workers job demand it is necessary to identify what will be the quantum of work that will be in demand and the time of demand. Based on these 2 factors a shelf of project is prepared. In order to identify the demand of work and its timing a labour budget is done. Thus a labour budget should provide 3 main information : 1) The quantum of work that will be in demand. 2) The exact time of demand for work. 3) A plan that shows the quantum and schedule of work that will be provided to the workers. If a prior plan is given to the workers, migration can be stopped. Previously such plans were not created and so workers were unaware of the works available and thus migrate to cities just after the agricultural season. Therefore it is important for Gram Panchayat to inform the workers about the available job and its timing well in advance of the kharif harvest. In the 12th plan period it is mandatory to present the annual plan by the Gram Panchayat at the Gram Sabha on 15th August.

    4. Adequate Shelf of Projects : The main implementing agent of MGNREGA work is Gram Panchayats. But due to lack of functionaries the projects face difficulties in its implementation. So in the 12th five year plan each block will appoint a full-time Programme Officer for MGNREGA. In areas were the population of SC plus ST is more than or equal to 30 per cent of the total population or the annual MGNREGA expenditure is more than Rs. 12 crores in any year since the programme started have to mandatorily have at least three Cluster Facilitation Teams (CFT), each of which will service a Cluster of Gram Panchayats (CGP). These CGPs will be accountable to each Gram Panchayat within their Cluster. Each CGP will cover 15000 job cards or an area of 15000 ha. Each CFT will have three member full-time professional support team. This will be a multidisciplinary team led by Assistant Programme Officer (APO) and will give technical support for planning and implementation of the projects.

    5. Reducing Delays in Wage Payments : According to MGNREGA it is mandatory to pay the wages after seven days or maximum within 15 days otherwise the workers are entitled to compensation. But a lot of payment delay has been reported. One reason for this is the delay in closing the Muster roll and starting of the transaction process. MGNREGS 2.0 specifies payment schedule that should be followed and tracked using transaction-based MIS system. Tracking through MIS system will help in identifying delay and for taking appropriate action. In Andhra Pradesh the website will give alert message when there is a delay in payment. Another reason for the delay in wage payment is non-availability of sufficient funds at district/block/GP level. Some places will be having surplus of funds and others will be facing shortage of funds. To manage the fund allocation properly, MGNREGS 2.0 proposes an integrated fund management system called e-FMS (Electronic Fund Management System). Under e-FMS the funds are centrally pooled but managed at state level. This will allow funds to be utilised by GP/ Block/District level officers from centralised fund through electronic transaction and the transaction will be completed within 24 hours.

    6. Strengthening Banks and Post Offices : In order to prevent leakages it was made mandatory in the original act to pay the wage through banks or post office. But due to low bank/post office density and lack of adequate personnel led to delay in wage payment or difficulty for workers to use this facility. In order to deal with this problem Banking Correspondent Model will be introduced. In order to make the Banking Correspondent (BC) Model viable, state governments are asked to appoint BC’s through a transparent process of selection with Rs. 80 per active account per year to be included under 6 per cent administrative expense head of MGNREGA. This is only a temporary provision still the Bank correspondent’s business becomes self-sustaining. In order to avoid delay in transfer of cheques and wage lists from Gram Panchayat to the banks 12th five year plan has proposed electronic transfer of data files to banks.

    7. Social Audits, Vigilance and Grievance Redressal : Another important feature of MGNREGA is its provision for monitoring and evaluating the projects under it. This is done through Social Audit and Grievance Redressal Cell. But only Andhra Pradesh has institutionalized social audit through setting up Social Audit Cell. So in MGNREGA 2.0 it is mandatory to set up Social Audit Unit(SAU) to facilitate Gram Sabhas to conduct social audit. The SAU will be responsible for building capacities of Gram Sabhas for conducting social audit by identifying, training and deploying suitable resource persons at village, block, district and state level from primary stakeholders and other civil society organisations. The SAU will create awareness regarding the rights of the labours and their entitlements and also help them to verify MGNREGA work related documents. Under MGNREGA 2.0 it is mandatory for states to upload the photographs of works at different stages of execution using NREGASoft software. States are also asked to link Aadhaar number of each worker in the MIS system. So that fake job cards can easily identified and removed. All states have to make provision for a three-tier vigilance mechanism to detect and follow up irregularities in the work including those identified during social audits. At the State level there will be a Vigilance Cell consisting of a Chief Vigilance Officer. Under MGNREGA 2.0, only 6 per cent of the total MGNREGA fund should be used for administrative expense.


    Many criticisms have been levelled at the MGNREGA.

    Effectiveness: MGNREGA has been argued to be no more effective than other poverty reduction programs in India. The program is beset with controversy about corrupt officials, deficit financing as the source of funds for the program, poor implementation, and unintended destructive effect on poverty. A 2008 report claimed the state of Rajasthan as an exception wherein the rural population was well informed of their rights and about half of the population had gained an income from the entitlement program. However, a 2011Wall Street Journal report claims that the program has been a failure. Even in Rajasthan, despite years of spending and the creation of government mandated unskilled rural work, no major roads have been built, no new homes, schools or hospitals or any infrastructure to speak of has resulted from the MGNREGA.

    Corruption: At the national level, a key criticism is MGNREGA-related corruption. Workers hired under the MGNREGA program say they are frequently not paid in full or forced to pay bribes to get jobs and aren’t learning any new skills that could improve their long-term prospects and break the cycle of poverty. There are claims of fictitious laborers, the dead being paid, and job cards used by corrupt officials causing so-called ‘leakage’ in program spending.

    Quality: Another criticism is the poor quality of work products from NREGA public works schemes. In a February 2012 interview,Jairam Ramesh, the Minister of Rural Development for the central government of India, admitted that the roads and irrigation canals built by unskilled labor under this program are of very poor quality and wash away with any significant rains. Villagers simply dig new irrigation pits every time one is washed away in the monsoons. The completed works do not add to the desperately needed rural infrastructure.

    Sustainability: The MGNREGA programme spent US$9 billion in the 2011 fiscal year according to official data. Economists have raised some concerns about the sustainability of this subsidy scheme – India’s fiscal deficit is expected to reach 5.6 percent of GDP this year, compared with 5.1 percent last year. The MGNREGA program has been found to distort labor markets and has helped — along with fuel and fertilizer subsidies — to balloon India’s federal fiscal deficit.

    Stunting of Skills: Yet another criticism is the unintended effect of MGNREGA in stunting of skills. A review published by India in September 2011 conceded the lack of skilled technicians at almost every site under MGNREGA program, along with rules banning the use of machinery or contractors (labour is usually by shovel). Such bureaucratic regulations mean that the labourers learn no new skill. Also, the ponds, roads, drains, dams and other assets built with manual labour are often of wretched quality. The idea behind MGNREGA program is to create as many jobs as possible for unskilled workers. In practice, say critics, it means no one learns new skills, only basic projects get completed and the poor stay poor — dependent on government checks