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1  Rationale of Bank Payments

Bank Payments: End of The NREGA attempts to make the process

Corruption in NREGA? of wage payment (even in cash) as trans­

parent as possible. There are a series of
safeguards mandated by the Act.3 Muster
rolls are supposed to be maintained at the
Anish Vanaik, Siddhartha worksite and displayed at the GP office.
Payments are to be made in public in front

The payment of wages into bank ecent reports of lurking corruption of all the labourers, with the details of
accounts for work carried out in public works initiated under the attendance and wages being read aloud
National Rural Employment Gua­ from the muster rolls, so as to reduce the
under the National Rural
rantee Act (NREGA) have led many obser­ risk of fudged entries being made. Job
Employment Guarantee Act has vers to advocate the payment of wages cards are intended to act as a record kept
been suggested as a way to through bank accounts, instead of cash with the labourers themselves of the
prevent embezzlement of funds. payments. The main advantage of this wages they have received and the number
approach is that it reduces the likelihood of days they have worked. Through these
The practice has already begun in
of any fudging of the muster rolls on the there has been an attempt to create a new
a few districts. Is this a foolproof part of the implementing agencies (e g, model of accountability in public works,
system to control corruption? the gram panchayats), since the actual eliminating corruption through the vigi­
The early experience from a few wage payments are beyond their reach. It lance of workers themselves.
can be  seen as an example of “the separa­ Unfortunately, from the larger survey
blocks in Orissa suggests that
tion of pay­ment agencies from implement­ mentioned earlier, it appears that a
this process is not free from its ing agencies”, adopted by several states number of these transparency safeguards
own problems. (in various forms) as a safeguard against have been systematically undermined in
the embezzlement of NREGA wages. Bank Orissa.4 Muster rolls are almost never
payments of NREGA wages have already present at worksites. The muster rolls that
been introduced in a number of districts, were examined by the survey teams were
and are likely to be used more widely in often found to have fake names or inflated
the near future. entries, suggesting a siphoning of funds by
Against this background, this paper the middlemen. The job card design was
presents a few observations on this faulty to the point of being useless (e g, it
arrangement, based on a field visit to had no column to record wage payments).
Mayurbhanj district (Orissa). The investi­ Contractors, who are banned under the
gation was carried out in October 2007, on Act from implementing NREGA works,
the sidelines of a larger survey of NREGA in were found at nearly half of the sample
Orissa.1 A small team visited three blocks worksites. Accompanying them was an
of Mayurbhanj district (Joshipur, Betnoti elaborate “PC system” (“percentage sys­
and Suliapada). It covered four randomly- tem”) of bribes to government officials at
selected gram panchayats (GPs) within various levels of the official hierarchy. In­
each block and one worksite in each deed, one of the reasons cited for the in­
GP. One worksite in each block was select­ troduction of bank payments in Orissa is
ed for detailed muster-roll verification that it would eliminate contractors from
and a questionnaire was filled at the system.
each worksite. The fundamental attraction of the use
Within Orissa, the system of paying of bank accounts for NREGA wage pay­
NREGA wages through bank accounts ments in Orissa is twofold. First, as men­
Thanks are due to Brahmachari, Nikhil Dey, was pioneered by Mayurbhanj. Beginning tioned earlier, it separates the payment
Jean Drèze, Sowmya Kidambi, Rajkishor from late 2006, by May 2007 most blocks agency from the implementing agency,
Mishra, Khetra Mohan, Kartikeyan Pandian in Mayurbhanj had initiated the practice thus making corruption far more difficult.
and Reetika Khera for helpful comments. of paying labourers through bank or Second, it ensures that money sanctioned
Anish Vanaik (anish.vanaik@gmail.com) and post office accounts.2 Today all but a for wage payments can be received only
Siddhartha (nlusiddhu@yahoo.co.uk) are both few of the remotest GPs in Mayurbhanj by the labourer listed on the muster
research scholars at the G P Pant Social disburse NREGA wages through bank rolls. It eliminates the possibility of any
Science Institute, Allahabad.
accounts. intermediaries – whether a contractor or a
Economic & Political Weekly  EPW   april 26, 2008 33

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34 april 26, 2008  EPW   Economic & Political Weekly


government official – getting their In most cases, these accounts were credit detailing the accounts of the labour­
hands on the money without the knowl­ found to be zero balance or “no frills” ers to which the funds are to be credited.
edge of the labourer. Once this possibility accounts. The Reserve Bank of India The funds are then transferred directly
is eliminated, other records like muster directive for “no frills” accounts for NREGA from the GP’s account into the bank
rolls and job cards should fall into place, purposes has been clearly helpful here. In accounts of the labourers. Delays during the
since there is little incentive to fudge the post office accounts, a minimum bal­ course of the transfer of funds from the GP
them if you cannot get the money at ance of Rs 50 is a requirement and there account to the labourers’ have been a
the end of it. is a cap of Rs 2,000 on maximum with­ major problem where the two accounts
Bank payments also have a useful trans­ drawal, per account, per day. are not in the same bank (more on this
parency role. They extend the trail of However, most of the accounts have later). One inherent flaw in this arrange­
transparency all the way down to the been opened as operable by one individual. ment is that the labourer receives no inti­
money actually reaching the hand of the Ordinarily, this is the male head of the mation as to when the wages are credited
labourer. In addition, it can be argued that household. One of the significant aims of to his or her account. An intimation proce­
bank payments of NREGA wages encour­ the NREGA is to ensure that women are dure needs to be put in place.
age savings and help to initiate people to paid equally and are able to exercise some
modern banking arrangements. control over their earnings. To this end, Cash Deposits in the Labourers’ Bank:
it  would be preferable to have at least Given that such delays were adding to
2 The System jointly operated accounts if not individual those that already exist (e g, linked to
This section discusses the system of main­ accounts for each NREGA worker. record-keeping and work measurement)
taining bank accounts and the instru­ Individual accounts for each worker some GPs have found it more convenient
ments of transfer. would also double up as a transparency to use the second method: to simply with­
measure. In the current set-up where wage draw the funds from the bank physically
2.1  Bank Accounts funds are simply credited to the account, and deposit them at the bank where the
In Mayurbhanj, accounts have been there exists no record, including passbook, labourers’ accounts are kept. In such cases,
opened in a variety of banks – rural banks, to identify the particular family member on a given day, the sarpanch and PEO will
cooperative banks, nationalised banks for whom the wage has been deposited. go to the bank together, withdraw the
and, in a few cases, post offices. The dis­ Introducing individual accounts would money, carry it to the other bank and
tance between the GP and the bank has resolve this problem. On the other hand, deposit it there along with a list of the
been the key criterion for selecting the there is a case for having a 1:1 ratio of job accounts into which the money is to go.
bank. The effort has been to open accounts cards and passbooks, in which case, as
in institutions that are as close as possible will be discussed below, new ways of Account Payee Cheques: In many GPs,
to the village where work is being carried entering wage information into the pass­ bank accounts were opened as a result of
out. For some of the more inaccessible book should go hand-in-hand with a joint payment made through account payee
tribal pockets which are not yet using account system. cheques. In order to compel workers to
bank payments, there are even proposals open accounts, they were paid through
to introduce mobile banks. This is the 2.2 Instruments of Transfer account payee cheques drawn on the GP
case in Betnoti. There are slight variations in the methods account. Otherwise also, payment through
In terms of opening bank accounts for followed by each of the three blocks vis-à- account payee cheques is a widely used
labourers, a variety of procedures have vis bank payments, but all are based on method to disburse wages in Mayurbhanj.
been followed. In Suliapada and Betnoti the same basic flow of funds. Once a One advantage of this method is that a
blocks, most bank accounts were pro­ project is sanctioned, the money for it is receipt or acknowledgement can also be
actively opened en masse for the labour­ sent to the account of the GP.5 As and when taken when the cheque is given to the
ers, with GPs facilitating the entire pro­ payments are due on the conclusion of labourer, unlike the letter of credit method
cess. However, very often, long periods of muster rolls at the worksite, the funds are where there is no interaction with the
time would elapse between the time when transferred from the GP account to the labourer before the actual payment is
application forms are completed and the labourers’ bank accounts. This is done in credited to the account of labourer. This
receipt of passbooks. In fact, in most cases, one of four ways: letters of credit from the also facilitates the regular maintenance
passbooks were received only after the GP account to the labourers’ bank, cash of job cards.
first payments had been made. In deposits in the labourers’ bank, bearer’s
Joshipur, on the other hand, there was cheques and account payee cheques to Bearer’s Cheques: In some places in
evidence that the opening of accounts was the labourers. Joshipur, instead of account payee
left to the individuals. The labourers cheques, bearer’s cheques were issued.
either took the initiative or were made to Letter of Credit: This is, at the moment, While still maintaining some of the ad­
open accounts so as to access the payment the most common instrument of transfer. vantages of the system of bank payments,
which was compulsorily made through In this system, the sarpanch and panchayat this arrangement is vulnerable to manipu­
account payee cheques. executive officer (PEO) draft a letter of lation. Any middleman who can manage
Economic & Political Weekly  EPW   april 26, 2008 35

to catch hold of the bearer cheque would of the date on which the work was 4  Bank Payment Hurdles
be able to withdraw the money. done as a basic entitlement of workers. Wage payment through banks is a recent
Quite obviously, the 15-day requirement innovation. Bank payment also means inter­
3  Reception applies to payments made through ­action of an external system with NREGA
There is a pronounced pattern to the way banks as well. processes, which is bound to present some
in which the elaborate system of bank pay­ Stray evidence suggests that where this policy challenges as well as compatibility
ments has been received. District or block has been done, labourers are prepared to issues. Some of these hurdles are here.
level officials are fairly sanguine about the accept it. Respondents from Renugaon (in
possibilities of the bank system. Extra­ Betnoti GP) claimed that they much pre­ (a) Excess Burden and Bank Reluctance:
vagant claims about the efficacy of the ferred the system of bank payments to It appears that banks (and even more so
system in eliminating corruption are often payments in cash. They understood that post offices) are reluctant partners to the
made. It is not uncommon, however, to see bank accounts helped to ensure that they scheme as a whole. This is somewhat sur­
GP level officials rather more circumspect received the correct amount of wages. At a prising, given the untapped potential
about the system. They maintain that worksite using the cash payment system, rural India holds for the banking sector.
it has added to their work and they speak they claimed, contractors could get away Two concerns were usually cited by bank
of the time that it takes to complete with paying them half the wages for half a officials. First was the fact that large num­
bank payments. day of work (the worksite was only kept bers of individuals were likely to transact
In a sense, however, these responses are open for half a day). business at the bank simultaneously. This
difficult to interpret given the evidence Renugaon was one of the villages where would entail holding amounts of cash that
that officials at a variety of levels often the labourers’ bank was very close to the the bank was not, in the past, required to
participate in the embezzlement of NREGA village. Where this is not the case, as at keep. A second related concern is that the
funds in Orissa. At least as important as Anla in Betnoti block, labourers could be branches near the GPs are small and ill-
the official responses is the way in which quite unhappy. The complaints were not equipped (staff- and infrastructure-wise)
bank payments are received by the labour­ simply about the fact that the bank was to deal with the large numbers of people
ers themselves. The first few questions to 8 km away. It was also because they would involved. Opening large numbers of
block or district level officials about how have to sacrifice an entire working day (if accounts and making entries on a given day
labourers have received the bank payment not more) to withdraw money from the is extremely difficult in a poorly staffed
system often yield formulaic declamations bank. Often, they might make the trip to local branch (or for a single postmaster).
about its convenience and efficiency, how the bank only to find that it would be
it eradicates corruption and encourages impossible for them to withdraw money (b) Delays: As mentioned earlier, in cases
the saving habit, and so on. It is only after on that day. where the GP account is held in a bank
a little probing that the responses begin to Quite worryingly, most labourers which is different from that of the labour­
suggest various acceptance problems in seemed unfamiliar with most of the basic ers’ bank, delays often ensue.6 Some
the “transition period”. The most common banking procedures and documents. Many branches of local banks refuse to accept
elaboration of this theme is something were unable to read their passbook, and letters of credit transfers unless they have
along following lines: “You know, these there was strong evidence that some had been approved by their regional offices.
tribal people, they want to work in the been made to sign withdrawal slips with­ Thus, the process of clearing this transfer
morning and receive payment in the out realising the implications. Nor had of funds often involves sending the letter
evening... Actually there is a local market there been any effort by panchayat or of credit from the panchayat’s account to
on Friday and they demand to have their block authorities to acquaint labourers the branch where the labourers’ account is
wages before that. They don’t understand with these practices. held, and from there to the regional head­
that this cannot be done...” It is only in a few places like Renugaon quarter of the bank, where the letter will
Quite apart from showing a casual con­ and Bilash (Suliapada block), where be approved. The funds will then be
tempt for labourers, this statement is em­ labourers were relatively familiar with released from the regional headquarters
pirically questionable. At SS Nahandasole, banking practices, that all the expected to the local branch and finally credited to
labourers said that they would be happy if benefits of bank payments seemed to be the accounts of the labourers themselves.7
they received their bank payments within visible. As mentioned, labourers in Renu­ We were informed that such a process
10 days, and, if needed, even two weeks. gaon testified that corruption had come would take 15-20 days at a minimum.
However, anything more than that, they down since the introduction of these pay­ Many labourers said that their main
said, made it very difficult for them to ments. A few of the labourers in these two problem in the bank payment system was
sustain themselves. This suggests that villages even said that they were begin­ the hardship caused by frequent delays. In
labourers can both understand the fact ning to save some money – a source of most places it was common to find that
that delays happen as well as cope with some hope that the system of wage pay­ wages were being paid around a month
them, as long as they remain within ments through banks, if introduced with after the conclusion of work. In Khand­
reasonable bounds. The Act itself provides due consideration of all these factors, can deula village of Betnoti block, labourers
for the payment of wages within 15 days take popular root. were paid in September for work that had
36 april 26, 2008  EPW   Economic & Political Weekly

begun at the end of May and ended in the accounts, there is no designated point in withdrawal of money, the labourers
middle of June. In SS Nahandasole, la­ the process at which signatures on muster claimed that the passbooks had been with
bourers’ post office accounts were credited rolls and entries in job can be made at all, someone else at the time of withdrawal. In
with their wages for two fortnights on let alone publicly. Different officials other cases, labourers said that they were
July 3, 2007. The work had commenced on choose to complete these documents at with the bank for updating (though a
June 1 and ended on June 24. different points of time, though most month or more might have passed since
It appears that, because of complica­ make people sign muster rolls before pay­ the time they received the money). In one
tions in the flow of funds, there is a temp­ ments are received and fill in job cards by instance, a contractor claimed that he had
tation to wait till work is finished and then and by. The uncertain status of two of the collected the passbooks, “as collateral for
credit large amounts all at once, instead of most essential transparency safeguards in loans given to the labourers”.9
regular weekly payments. This tendency the NREGA is an unacceptable situation; Given such evidence that middlemen
adds to other delays, such as those due to more so because a simple policy directive had collected passbooks, it is difficult to
work measurement and record keeping. can clarify matters tremendously. interpret the pattern of deposits and with­
Furthermore, in the absence of any inti­ A pessimistic, if only partial, view of the drawals found in the survey villages. In
mation arrangement, the money reaches system of bank payments might hold that it four villages where we were able to see
the accounts of labourers without them has ended up merely adding another docu­ the passbooks the pattern was that all the
knowing about it. As a result, most labour­ ment to the numerous records that are sup­ money would be withdrawn on the first
ers are informed about the money reach­ posed to be maintained under NREGA. In visit after deposit. If, for instance, Rs 2,400
ing them through some middleman (usu­ some places, the bank passbook has be­ was deposited in a post office account on
ally a contractor who has greater access to come a requirement for being employed at July 10, 2007, Rs 2,000 would be with­
the panchayat officials than they do). worksites. As elsewhere in Orissa, where an drawn on July 10, 2007 itself (this was the
These delays and lack of intimation open incomplete distribution of job cards has led maximum withdrawal limit) and the
up spaces within the system into which to dangerous “adjustments” in the muster remainder on the very next day. Therefore
contractors and other middlemen insert rolls to accommodate workers without a the money withdrawn was immediately
themselves, claiming, then, that they form job card, an inadequate distribution of visible in each of these four villages.
an indispensable link in the chain. passbooks is having a similar effect.8 Offi­ However, in each of these, there was also
cials and labourers claim that people who evidence that a contractor or suspected
(c) Distance: While the question of dis­ do not have passbooks are being paid contractor had collected the villagers and
tance from the village was one that the through other people’s passbooks, with the accompanied them to the bank. In the one
block officials were relatively sensitive to, money being divided up between labourers village where we could see the passbooks
many labourers interviewed did complain later. In such a situation it is difficult to and there was no suspicion of a contractor,
about the distance of the bank from the know where “adjustment” ends and cor­ the pattern of withdrawals was more mixed.
village. In Anla, labourers claimed that ruption begins. In essence, the system of
the bank was far away (they said that it adjustment runs completely counter to the (f) Incomplete Separation of Imple-
was 9 km away) and that it was extremely aim of introducing the passbook system in menting and Payment Agency: One
inconvenient to use it. the first place – to extend the trail of trans­ question that must be posed is how effec­
parency right down to the labourer’s pocket. tively the implementing and payment
(d) Complication of Records: Muster In other words, if a system of bank pay­ agencies have been separated in Orissa so
Rolls, Job Cards and Passbooks: In the ments is to be put in place, it is essential to far. The idea of separating implementing
enthusiasm to introduce the system of ensure complete distribution of job cards, and payment agencies is that, since the
bank payments, insufficient attention has and importantly, passbooks as well. One implementing agencies would not have
been paid to the status of the documents convenient way of doing this might be to the money at any point of time, there
already involved in the NREGA. Where have the job card application “double up” would be less of an incentive to fudge the
bank payments have been introduced, a as an application for a bank account. Both muster rolls. However, the system of pay­
degree of ad hocism has appeared with documents, then, can run in tandem. ment, as it stands in Orissa, does not
res­pect to maintaining muster rolls and achieve this separation to a satisfactory
job cards. The Operational Guidelines (e) Continued Vulnerability to Deception: degree. In practical terms, it is panchayat
envisaged a system where the maintenance The most disturbing finding, however, officials who prepare the muster rolls. The
of muster rolls and job cards is built was that in a number of villages labourers same officials then write the cheques on
around the distribution of wages in public: did not have their passbooks with them. In the basis of the muster rolls and sanction
details on the muster rolls would be read four out of the 11 villages that we visited, payments from the bank.
out, wages distributed, signatures/thumb labourers either did not have their pass­ A more effective separation of these
impressions of labourers collected and job books or these had been recently returned would entail, at one end, some amount of
card entries made. Since (in most places) to them because of the news of an impend­ effort at training “mates” (worksite super­
letters of credit mean that money is directly ing survey. In the case of Nahandasole, visors) to maintain muster rolls and over­
transferred to the labourers’ bank when we examined the dates of the see work in conjunction with the junior
Economic & Political Weekly  EPW   april 26, 2008 37

engineer. In this way, the muster roll prep­ separation of implementing agencies and
aration would not be in the hands of the payment agencies. It is worthwhile to
GP officials. At the other end, it would examine some of the other aspects of the
mean re-examining the way in which the Andhra system with respect to the pay­
funds are released to the panchayats. ment of wages through the post office,
In Andhra Pradesh (AP), the muster rolls which have a potential to be fruitfully
are passed directly to the block which emulated in other places.
sanctions payments and sends it directly Andhra Pradesh has worked out a method
to the post office at which the labourers’ of integrating bank or post office pay­
accounts are held. The PEOs and sarpanches ments with intimation of labourers and
in Orissa can direct and manipulate the records maintenance. When the muster
flow of funds in a way that is impossible rolls are being paid from the block to the
for panchayat level officials in AP to do. bank, a computerised pay slip is also printed
This opens up many possibilities of collu­ at the block office. These are sent for
sion and misappropriation of funds. A PEO distribution in public to the village. At the
could, for instance, in tandem with a con­ time of their collective distribution, the
tractor, arrange to have money sent into muster roll details are read out and job
accounts of people close to the contractor card entries can be made. This is a fairly
with the money being shared later. The innovative approach that can resolve the
possibility of such collusion is not ruled two basic problems that affect the bank­
out in the AP system. It is, however, made ing system in Mayurbhanj: lack of trans­
less likely since the responsibility of the parency during payment of wages and
panchayat officials ends at the point of absence of intimation arrangement.
preparation of muster rolls. They do not A second interesting innovation has at­
deal with the money at all. tempted to address the issue of delays. In
As can be seen, the system of bank pay­ some districts of AP, this is being done
ments is not free of hurdles. Some of these, through advance payments. A payment of
for instance bank reluctance, have been Rs 60 (out of a minimum wage of Rs 80
negotiated over time. Others threaten to per day) is credited to labourers’ accounts
get entrenched if they are not addressed immediately after the end of the week
immediately. At any rate, it must be and the rest is credited later according to
acknowledged that an unqualified enthusi­ the work measurements, thus ensuring
asm about bank payments is unwarranted. that labourers do not have to turn to
Banks in Mayurbhanj cannot be thought contractors or moneylenders for their
to have eliminated fundamental problems, immediate needs.
like the presence of contractors or the pos­ There is much to be gained from under­
sibility of corruption. Even some of the standing these alternative models of pay­
more procedural matters – policies with ment, particularly with respect to the
respect to clearances across banks and solution of similar administrative prob­
guidelines about completion of records lems. Experiences from AP and elsewhere
and measures to ensure prompt payment should be drawn upon in carrying forward
– appear to have been inadequately relatively new reform tools like the bank
tackled. If there was more clarity on these payment system.
policies, performance of banking system
could have palpably improved. As 6  Future Prospects
things stand, over half a year since the The system of bank payments for the
introduction of bank payments in NREGA in Orissa looks set to be expanded,
Mayurbhanj, one can, at best, express a with a number of other districts preparing
cautious approval of the banking system to take it on as the model for removing cor­
in principle, but the details of the system ruption and ensuring correct payments.
fail to impress. However, there seems to be little discus­
sion of how a qualitative improvement can
5  Comparison with Andhra Model be brought about in the system. As we have
The system of bank payments in Orissa argued, some thought needs to be put into
took inspiration from AP’s experience. We the strengths and weaknesses of the system
have already dealt with the issue of before such expansion occurs.
38 april 26, 2008  EPW   Economic & Political Weekly

A major concern is the ad hocism that of the family into one entry. This makes it cannot eliminate corruption. Improving
has persisted in the implementation of quite difficult for the recipients to verify the system of bank payments can only go
bank payments. Bank policy vis-à-vis NREGA that they are getting their due. It would part of the way towards that end. Building
wages at a variety of levels should be enhance the transparency of the system if a culture of transparency and account­
clarified and standardised as much as pos­ there were some indication of the period ability in the implementation of NREGA re­
sible. Methods of transfer of funds vary for which payment is being made as well mains extremely important.
from place to place. It is advisable that as of the person to whom it is due (as per
uniform, transparent procedures be intro­ the muster roll). Alternatively, a new kind Notes
duced everywhere. Equally important is of passbook can be designed which could 1 The main findings of that survey are reported in
Drèze, Khera and Siddhartha (2007).
to avoid accentuating delays in wage pay­ cover these demands specific to the NREGA.
2 In Mayurbhanj, both banks and post offices are
ments and the flow of funds. We have There is also some evidence that middle­ being used to disburse payments. For the sake of
presentational clarity, we will, from here on, only
already discussed how Andhra Pradesh men are being able to withdraw money mention “bank accounts” or “bank payments”. It
has used advance payments to address from the bank for groups of people with should be noted that post office accounts are
similar to bank accounts in most relevant
this problem. Delays can also be reduced simply the signature of the labourers on respects. The differences, where applicable, will
by negotiating with banks so that local the withdrawal slips.10 Protocols relating be indicated.
3 The full text of the Act is available at www.nrega.
branches are allowed to honour letters of to the NREGA wage payments must strictly nic.in; for a reader-friendly introduction, see Dey,
credit from the GP, without having to seek disallow such withdrawals without the Drèze and Khera (2006). A “muster roll” is essen­
tially a record of labourers’ attendance at the
the permission of the regional office. physical presence of the account holder. At worksite, also used for wage payments and to
Related to this, means need to be the other end, some amount of informa­ claim funds from the block office. The details of
attendance and wages are also recorded on each
devised to ensure that labourers are inti­ tion must be disseminated about the pro­ labourer’s “job card”.
mated directly when money has been cedures to be followed at banks – the pro­ 4 See Drèze, Khera and Siddhartha (2007).
5 This applies to projects that are being carried out
credited to their accounts. In Andhra cesses of deposit and withdrawal, and the by GPs. The money for projects operating through
Pradesh, as we saw, there is a system of importance of the various documents the panchayat samiti is released directly from the
district to the labourers’ accounts.
pay slips being distributed to labourers related to the bank (passbooks and with­ 6 According to the block officials, this often hap­
when letters of credit are issued to the drawal slips in particular). pens because of a finance ministry guideline stat­
ing that for a given scheme, all the funds of a GP
post office. Apart from the question of in­ It is only when people become more must be kept in one bank. Some of them felt that
timation, this kind of collective gathering comfortable with banks and banking pro­ permission should be given to GPs to open
accounts in more than one bank.
for the distribution of pay slips would cedures that there can be a reasonable 7 The procedure followed in the case of the post of­
ensure that the workers as a collective expectation of savings. Evidence that the fice is similar. The cheque, in that case, is depos­
ited at the regional headquarters of the post
body remain a vital cog in the transparency payment of NREGA wages through banks office. For instance, for the Betnoti POs, this is at
processes of the NREGA. Such collective is leading to savings has been quite thin so Baripada, this then, comes to the major local PO
within the block (Manantri for Betnoti) and the
processes would offset the otherwise indi­ far. Either accumulated debts or manipu­ postmaster of the village branch will then go
vidualising tendencies of bank payments lation by contractor has meant that most to that post office and carry the money to the
village PO.
as a system of receiving wages. Public dis­ of the wages received by labourers are 8 On job cards in Orissa, see Khera (2008).
tribution of pay slips also facilitates the withdrawn immediately. Nevertheless, if 9 Apart from our suspicions that he had siphoned
off labourers’ wages, this contractor admitted
regular maintenance of job cards – a weak the system succeeds in the long term, it that in exchange for such advances he would re­
point of the system of bank payments would address some of the problems that duce the price of the rope he bought from them by
Rs 1-2 per kilo. Rope making is a common survival
in Orissa. seem to impede savings – contractors and activity in Mayurbhanj during the slack season.
indebtedness in particular. In that case, The yields from it are extremely low. The fact that
Enhancing Transparency even the price of this minimum lifeline is reduced
the system of bank payments may well in lieu of loans, speaks volumes about the insidi­
Bank policy on the question of the kinds of come into its own. Banks can also be ousness of the system of advances operated by
such contractors.
accounts to be opened also needs to be effective in solving the problems of 10 The possibility of collusion between middlemen
clarified. So far, bank accounts in Mayur­ storage of money that people in rural and bank officials was raised by some of the
people we spoke to. In such cases, it is important
bhanj have been opened in the name of areas face. NREGA wages are often that stern action be taken to discourage further
male household members. This has signif­ received in large amounts, and it is likely emulation.

icant drawbacks, in terms of gender equal­ that banks, as a safe way to store money,
ity as well as transparency. The best alter­ might displace such repositories as References
native would be a system of individual gold jewellery. Dey, N, J P Drèze and R Khera (2006): Employment
Guarantee Act: A Primer, National Book Trust,
accounts, though even jointly operated Last but not least, it is important that New Delhi, also available at www.righttofood­
accounts would be preferable to the bank payments should not be seen as india.org.
Drèze, J P, R Khera and Siddhartha (2007): ‘NREGA in
current system. super­seding the other transparency meas­ Orissa: Ten Loopholes and the Silver Lining’,
It might be useful, also, to devise new ures that the NREGA sets in place. In par­ mimeo, G B Pant Social Science Institute, Alla­
habad, also available at www.righttofoodindia.org.
protocols for passbook entry as they relate ticular, accurate maintenance of job cards Government of India (2006): NREGA: Operational
to NREGA wages. As mentioned earlier, the and muster rolls must be strictly enforced. Guidelines 2006, Ministry of Rural Development,
New Delhi, also available at www.nrega.nic.in
current practice is to club payments from From Mayurbhanj itself, it is clear that Khera, Reetika (2008): ‘The Black Hole of NREGA
different weeks and for different members bank payments, in and of themselves, Records in Orissa’, forthcoming in Yojana.

Economic & Political Weekly  EPW   april 26, 2008 39