In-Depth Analysis: Aadhaar-Based Wage Payments in MGNREGS – A Shift Towards Efficiency or a Path to Exclusion?

The Indian government’s recent decision to mandate the Aadhaar-Based Payment System (ABPS) for wage disbursements under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has ignited a complex debate. This policy, implemented from January 2024, is being viewed through various lenses of efficiency, technological advancement, and potential exclusion of vulnerable populations.

The Government’s Perspective

The central government advocates for the ABPS, framing it as a critical step towards modernizing and streamlining the payment process. The primary aim is to plug systemic inefficiencies and ensure that wages reach the intended beneficiaries without delay or misappropriation. The government contends that this system will mitigate fraud and leakage in wage disbursements, thereby enhancing the overall effectiveness of MGNREGS.

In response to concerns about the exclusivity of the Aadhaar linkage, the government has indicated a willingness to be flexible. It suggests leniency in cases where Aadhaar linkage has not been completed due to legitimate reasons. However, the official stance remains firm on the need for the ABPS in the long term.

Concerns and Criticisms

Despite the government’s assurance of flexibility, the shift to ABPS has raised significant concerns among activists, academics, and opposition parties:

  1. Risk of Exclusion: Critics argue that making Aadhaar linkage mandatory could potentially exclude a significant portion of MGNREGS workers. There are apprehensions about the deletion of job cards when Aadhaar authentication fails. According to LibTech India, around 7.6 crore workers have been removed from the system in the past 21 months, indicating a possible trend of exclusion.
  2. Technological and Bureaucratic Challenges: The mandatory nature of ABPS is scrutinized in the context of India’s diverse and sometimes technologically challenged rural landscape. Concerns are raised about the readiness of the bureaucracy and the infrastructural capabilities to support this transition. The dependency on demographic authentication via Aadhaar has its own set of technical challenges, leading to fears of wrongful deletions of job cards.
  3. Political Opposition: The Congress party has been vocal in its criticism of the policy, alleging that the government is using technology as a tool to deny social welfare benefits to the most vulnerable. The party’s stance is that this move is a reflection of a broader pattern of using technology for exclusion rather than inclusion.
  4. Statistical Overview: As of late December 2023, about 34.8% of job card holders were reported to be ineligible for ABPS. This statistic raises questions about the readiness of a significant portion of MGNREGS workers for this transition. Additionally, the deletion of a substantial number of job cards in the fiscal year 2022-23 is seen as a worrying trend.

The Way Forward

The Aadhaar-based wage payment system in MGNREGS is a policy shift that brings to light the delicate balance between technological advancement and the risk of excluding vulnerable populations. The effectiveness of this policy will depend on how well the government can address the technological and administrative challenges, as well as the concerns of exclusion. The coming months will be crucial in understanding the actual impact of this policy on the rural employment landscape in India​​​​​​​​.



Send Us A Message