Context: Central government has notified that from January 01, 2024, all wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme must be paid through an Aadhaar-based payment system (ABPS). However, some state governments have opposed this move.
About NREGA Aadhaar-based payment system (ABPS):
- It is a method of disbursing payments to MGNREGA workers using their unique 12-digit Aadhaar number as their financial address.
- Under this system, workers’ Aadhaar numbers are linked with their job cards as well as their bank accounts, this account must be connected to the National Payments Corporation of India (NPCI) mapper.
- Under Mahatma Gandhi NREGS, APBS is in use since 2017.
- The system was initially made mandatory from February 1, 2023. However, through several extensions, the Centre allowed this requirement to persist until December 31, 2023. As no further extensions were granted to states beyond December 31, the ABPS became mandatory from January 1, 2024.
- The government grant exemptions on a "case-by-case basis" if any gram panchayat experiences "technical issues" or Aadhaar-related problems until the resolution of the underlying issue.
- Aim is to streamline wage payments and ensure transparency, reducing the chances of fraud.
Benefits of ABPS:
- Ensuring that payments are made to the rightful beneficiaries, reducing the chances of fraud and corruption and eliminating intermediaries.
- Reduces paperwork, minimizes delays, and ensures a faster and more streamlined disbursement of wages.
- Encourages financial inclusion by promoting the use of bank accounts.
- Digital records make it easier to track and audit payments.
Challenges associated with ABPS:
- Deletion of job cards: 7.6 crore job cards deleted since April 2022 due to discrepancies between the two documents, the Aadhaar and the job card, such as different spellings of workers’ names.
- Right to work (Article 41): Compelling the use of ABPS with more than one-third of the total MNREGA registered workers rendered ineligible will inevitably lead to the denial of the right to work.
- Exclusion of workers: Till December 2023, 12.7% of these active workers are still not eligible due to technological adeptness or a lack of proper documentation.
- Active workers are those who have worked for at least one day over the last three financial years.
- Privacy concerns: Mandatory linking of Aadhaar to NREGS payments raises privacy concerns, as it involves collecting and storing biometric and personal information.