Technology plugged the leaks in India’s ₹60,000 crore rural employment guarantee scheme

Technology plugged the leaks in India’s ₹60,000 crore rural employment guarantee scheme

  • The Economic Survey 2018-19 highlights how technology has helped the Indian government plug leaks in the country's 'food for work' programme -- the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • It attributes the programs success to the JAM trinity of Jan Dhan, Aadhaar, and mobile payments.
  • The National Electronic Fund Management System (NeFMS) also also helped the government keep a more accurate account of which workers are on the payroll and if they're actually showing up for work.
The origins of ‘food for work’ programs trace back to Kautilya’s Arthashastra — a Indian documents on statecraft, economic policy and military strategy.

John Keynes, who popularised the theory, was still a century behind Nawab Asaf-ud-Daula who already had a ‘food for work’ program working in Lucknow when famine struck in 1784.

In today’s day and age, India’s Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is using technology to streamline the national ‘food for work’ scheme to bring financial and economic inclusion.

The JAM trinity — Jan Dhan, Aadhaar, and mobile payments — has eased the validation of beneficiaries and the process for releasing funds, according to Economic Survey 2018-19.

Wages directly to the people

Since it’s induction in 2005, the programme was riddled with issues. But, applying Direct Benefit Transfer (DBT) and Aadhaar-linked Payments (ALP), the Indian government has been striving to reduce delays in the payment of wages, curb corruption and political interference, and plug up any leakages in the system.


As a workforce programme, MGNREGA’s mandate is to alleviate distress and ensure payments happen in a timely manner. Before DBT, wages were transferred into panchayat bank accounts and most of the workers had to collect their wages from the gram panchayat office.

And, in order for DBT to work — the workers needed bank accounts. That’s when the Pradhan Mantri Jan Dhan Yojana (PMJDY) was implemented to bring about universal access to banking facilities.

The Economic Survey 2018-19 highlights that before the implementation of ALP and DBT, there used to be an average lag of 90 days before wage payments for recieved. After their implementation, that lag has been cut down one-third from 35% to less than 10%.

Culling out the ‘ghosts’ in the system

Bringing in Aadhaar linked payments ensured that the government would not be funding any ‘ghost’ beneficiaries.

The National Electronic Fund Management System (NeFMS), implemented in 2016 and currently functional in 24 states, bolsters that effort by providing a real time database of wages being credited into bank or post office accounts by the central government.

NREGAsoft, a local language workflow based e-governance system, looks at registration and muster rolls, a form of attendance register signed by workers to check false reporting of numbers.

The service isn’t available to the public but does make it easier for the government to keep track of who is employed under the scheme and whether they are actually showing up for work.

The government’s also held accountable of its actions with the use of mobile apps like Gram Samvaad Mobile App and JanMnRega were rural workers have direct access to information and can give their own feedback on how the system is working.

The supply demand gap

Since the government now access to data, the Economic Survey 2018-19 asserts that it will be able to implement MGNREGA more effectively by pushing government officials to provide more jobs in distressed areas.

This should help bridge the demand supply gap between jobs available and the enlisted worker by using data provide jobs where there is more demand for them and vice versa.

The survey also highlights how the vulnerable sections of the society — women, scheduled class, and scheduled tribes — have increased their participation in the program during times of distress.

Going forward, the government wants to expand the number of jobs available to workers under the scheme, upskill the workers it has enlisted, expand the use of JAM, and use digital infrastructure to expand MGNERA beyond wages to also offer micro-insurance, micro-pensions and micro-credit to the underserved sections of society.