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The Modi government’s accounting jugglery and gaslighting are legendary. Yet, here is one more instance, which is a work-in-progress, and threatens to further damage the society and the economy.
We are talking about the caste-based payment system in the Centrally sponsored rural job guarantee scheme MGNREGS introduced from April 2021 (for FY22).

The Ministry of Finance (MoF) introduced new payment and accounting systems for the MGNREGS, which is run by the Rural Development (MoRD), for FY22. It asked the MoRD to split wage payments into three categories: SC, ST and Other (OBCs and General category workers) – without explaining why.
The “advisory” read: “Government of India has decided to provide separate budget heads for SC and ST categories under MGNREGS from the financial year 2021-22 for wage payment. The existing system for wages under the scheme is for only one type that is there is no category wise provision of wage payment.” It added: “In the NREGASSoftStats/UTs may generate FTOs for SC, ST and other category beneficiaries.”

This was meant to prioritize the payment of wages to the SC and ST workers and consequently, has delayed payments for the OBC and General category workers, causing much distress.
The FoM’s move is perplexing since the MGNREGS Act of 2005, which governs the MGNREGS works, is not dedicated to or discriminates against any particular caste or community. It’s a universal programme, aimed at providing relief to rural populations passing through economic distress – through unskilled manual work on demand.

A Parliamentary Standing Committee, which examined the “demand for grants” of the MGNREGS’s administrative agency, Department of Rural Development (DoRD) for FY23, the report of which was tabled in the Parliament on March 16, 2022, commented: “Such absurdity (caste-based payment) is nowhere mentioned in the Act and digressing from the basic tenets of treating all the MGNREGA beneficiaries at par call for sternest possible criticism.”

It also said: “The Committee finding themselves at a total ‘loss of words’ could not fathom the rationale behind such idea”, adding “creation of such payment system where in one specific community is preferred over the other solely on the ground of caste will only give rise to resentment and create a rift among the beneficiaries of MGNREGA”.
The committee’s recommendation: “In view of such piquant situation, the Committee unanimously recommend DoRD to restore the earlier mechanism of generation of single Fund Transfer Order without any sort of segregation on the basis of caste so that the welfare-oriented nature of MGNREGA is not divided on caste basis.”
By the time this report came (March 2022), the damage had been done. In the meanwhile, on November 1, 2021, the FoM reversed its earlier advisory. But we are going ahead of our story.

Havoc caused by caste-based MGNREGS payment

The logic for splitting the payment system was not explained in the FoM’s advisory. Its damaging consequences have also not been assessed by the Central government. It would be too naive to even expect either after a long history of top-down decisions by the Modi government the adverse consequences of which have not been tracked by it: From self-serving demonetization to botched GST to untimely, unplanned lockdown and unlocking to anti-farmer and pro-corporate farm laws to anti-worker, pro-industry labour codes to the indiscriminate sale of public assets.
“The Hindu” tracked the impact of the caste-based payment system in October 2021 and revealed the horror it has unleashed.

It found, while SC and ST workers received timely payment, there was a considerable delay and discrimination against co-OBC and General category workers. It quoted labour rights activists of Rajasthan Kartik Singh saying: “These are people who did the work together, at the same worksite, under the same mistri (mason), for the same number of days. They were all on the same muster roll. But those from SC and ST got paid within 15-20 days. Those from other communities had to wait two months…Panchayat officials say they have submitted the details for everyone, but the order to split the payments by caste has come from higher up, so they cannot do anything.”
In October 2021, LibTech India, which tracks MGNREGS works, reported the impact after analyzing 18 lakh transactions in 10 states from April to September 2021.
Its findings explain it all:

  • Fund Transfer Order (FTO) for 46% in stage 1 (states send payment details to the Centre) and for 80% in stage 2 (Centre transfers fund directly to beneficiaries) for SCs was timely, as against 37% and 63% for STs and 26% and 51% for Other (OBC, General), respectively.
  • The negative impact of the “Other” category is uniform across most states.
  • The negative impact was severe in states with relatively higher ST populations, such as Madhya Pradesh, Jharkhand, Odisha and West Bengal. In MP, for about 50% of SCs and STs stage 2 payment came in 7 days, but it was 7% for Other. In Jharkhand, stage 2 payment for over 33% of SCs and STs was within 7 days, but 16% for Other.
  • The difference in stage 2 (Centre paying directly into the account) by caste was highest in September; nearly 75% of SC and ST payments were completed in 15 days while that was so for only 25% for Other.

Concerns poured in from Andhra Pradesh, Chhattisgarh, Bihar, Karnataka, Telangana, Tamil Nadu and others. The Karnataka government wrote to the Centre that the SC accounts received funds six times during a period when no funds were received for the other two categories, although wage demand was generated across categories at the same time. It said, the field officials were unable to provide explanations to those left out.
Laavanya Tamang, a researcher at LibTech India and based in Jharkhand, expressed concerns: “The caste-based segregation has caused much distress and distrust among the NREGA workers. Many general and OBC workers have received their payments weeks after their SC and ST co-workers did, and this has led to immense disillusionment in their ranks with a few already stopped seeking work. Panchayat level NREGA functionaries, like the NREGA Mates, are facing harassment and accusations of suppressing wages on caste lines and favouring their own communities.”

Finally, the FoM woke up to the harsh ground realities and issued an “Office Memorandum” on November 1, 2021, partially rolling back its March 2021 advisory.
It said, without specifying when: (i) “MoRD may revert to the previous system of generating single muster, single FTO and transferring money into single NeGMS account.” But this was conditional. The next two bullet points said: (ii) “However when the FTO is generated in NREGASoft, the total payment proposed to be paid to SCP, TSP and Others within the FTO has to be clearly indicated” and (iii) “Based on the FTP, a single sanction order would be generated in PFMS showing category-wise amount under three different Minor Heads of SCP (789), TSP (796) and Others (101).”
Now, why should “category-wise amount” for SC, ST and Other categories of the MGNREGS workers be recorded and reported to the Central government?
One would be naïve to expect reasons or explanations, as warned earlier. But for the record, none is available. Many have tried to find out and failed. But it would be even more naïve to dismiss the FoM’s “advisory” and “Office Memorandum” as illogical or mindless. The Modi government doesn’t act without hidden motives. Read on to find out.

New accounting elements in MGNREGS

Simultaneously, the MoRD introduced two accounting “minor heads” under the MGNREGS for the first time in FY22: Special component for SCs and Tribal Area Subplan. Both can be found only in the Detailed Demand for Grants (DDG) of MoRD for FY23. The earlier years of DDGs don’t have them.
Now if the FoM’s March 2021 advisory was to map payments made to SCs and STs under the MGNREGS, that (‘SC’ and ‘ST’ minor heads) should have been listed as minor heads in the DDG. Why should “Special component for SCs” and “Tribal Area Subplan” substitute those?
Here is a clue.
The “Special component for SCs” is part of the Ministry of Social Justice and Empowerment (MoSJ&E)’s Scheduled Caste Sub Plan and “Tribal Area Subplan” is part of the Ministry of Tribal Affairs (MoTA) – both unconnected to the MGNREGS.
The SC and ST subplans are umbrella plans for the overall development of SCs and STs but with separate budgets and different goals than the MGNREGS. As mentioned earlier, the MGNREGS is a universal scheme in which jobs are given to anyone and everyone who demands them in rural India.
Why are SC and ST “sub plans” in MGNREGS?
There could possibly be two reasons.
One, both “Special component for SCs” and “Tribal Area Subplan” are part of other Central government’s “major head” schemes under the MoRD for FY23 too: Housing, Social Security and Welfare, Special Programme for Rural Development, North Eastern Areas, Grants-in-aid to State Governments (including Centrally Sponsored Programmes, Pension, Family Benefit, NRLM etc.).
There is one exception under the MGNREGS. Under “Rural Employment” ‘major’ head, there is a minor head, “Extension of Rashtriya Suraksha Bima Yojana (RSBY) to MGNREGS Workers” but this is meant for all MGNREGS workers, not exclusively for SCs and STs.

At least in the previous DDGs for FY21 and FY22, there is no mention of special components for SCs (SC subplan) and ST subplan. All this then means that the caste-based subheads under the MGNREGS are an extension of the Centre’s plan to count all expenditures on SCs and STs.
But why does the Centre need to do this?
The obvious answer is that the Central government could have multiple objectives in counting how much money it is spending for SC and STs (from taxpayers’ money, not private funds). And so, it is splitting payments on a caste basis in the MGNREGS in violation of the universality, letter and spirit of the MGNREGA Act of 2005 and introducing a caste divide where none exists.
The parliamentary committee was so upset that it used words such as “absurdity”, “startling”, “taken back and aghast”, “belying all logic and employing such modality, surpasses any prudence whatsoever”, “at a total loss of words”, “could not fathom the rationale behind such idea” etc. to describe the Central government’s move – unprecedented for any such committee to write about any Central government scheme or decision in living memory. In fact, these words and phrases are found within the first 139 words of the very first (long) paragraph.

“BJP has created a new beneficiary group to build a new vote bank with welfare policies using public money for private political gain”

The FoM may have modified its March 2021 order but remember, the objective is intact. As the two subsequent bullet points listed earlier, the revised order is very specific that although a single payment order can be made, the PFMS (public financial management system) must show “category-wise amount under three different Minor Heads” of SC, ST and Others.
This brings to the second possible reason – and goes beyond a mere accounting exercise or jugglery.
That is because the MoRD knows how many SC and ST person-days are being generated from the MGNREGS’s MIS database as and when it needs. The annual data is available on the MGNREGS’s homepage.
Click “At a Glance” icon and it promptly shows how many person-days were generated in which year in the percentage of the total. From here, the average annual person-days generated for five years between FY18 and FY22 are: For SCs, 20.4% and for STs, 18% (for women, 54%).
What more does the Central government need?
The answer could be found by looking at a parallel development taking place after the Modi government came to power.
Here are two newspaper headlines for illustration purpose.
Pink daily Business Standard’s headline of September 20, 2016 (two years after the Modi government came to power) read: “Under Modi, record rise in unspent funds for Dalits & tribals”.
Web news portal The Print’s headline of March 18, 2021, read: “Rs 50,000 crore, or 20% of funds allotted for SC welfare, left unused by Modi govt in 4 years”. The article added that from FY18 to FY21, about Rs 2.6 lakh crore was sanctioned for the welfare of SCs, of which Rs 49,722 crore was surrendered by ministries/departments.
This is long known to academics and activists who track ST and SC subplans. But still, something is missing from the (second) possible answer.
How is the Centre’s neglect of funding or utilization of funds for SCs and STs connected to the counting of the actual spending under the MGNREGS (its website gives only person-days generated for SCs and STs, but not actual payment)?
Remember the 2022 budget?

FM’s claim

Finance Minister Nirmala Sitharaman claimed in her budget speech that health expenditure was going up by 137%. Going by the allocation for FY21 (BE), it was just a rise of 10.5% over that of FY21 (BE) – from Rs 67,484 crore to Rs 74,602 crore. But from FY21 (RE), it was drop by -9.5% (going by the headline numbers) and by -13.6% (going by the actual ministry-wise allocation of Rs 71,269 crore).
How did Sitharaman claim a 137% rise then?
Simple, she added budget allocations for (i) AYUSH Ministry, which peddles Ayurveda, Unani, Siddha and a whole lot of untested and unscientific concoctions like Ramdev’s Coronil and (ii) several other ministries’ allocations for drinking water, sanitation, nutrition etc. and the total came to Rs 2.24 lakh crore (check annexure 1 of the budget speech of 2021, page 37 to believe it).
She then tom-tommed the 137% rise as an achievement for days.
What is the point of this digression?
Next time Business Standard and The Print write those headlines or rival political parties, SC/ST groups scream “foul”, the Central government will turn back, add the MGNREGS money to the SC/ST sub-plans to give you a bloated figure.
But do such tricks work?
Trust me, it does.
Recall the recently concluded elections in five states, of which the BJP retained four (it doesn’t exist in Punjab and so the Punjab election doesn’t count here). Both before and after the elections, the BJP-run Central and state governments claimed they did ‘vikas’, sought votes for ‘vikas’ they had done and when they won the elections attributed their success to ‘vikas’ too.
Apart from news media and anecdotal evidence, the Lokniti-CSDS post-poll survey and Axis-My India exit-poll provided more substantial evidence that in Uttar Pradesh, Uttarakhand, Goa and Manipur the BJP won because of the Modi government’s good governance record and welfare policies (free ration and cash transfers). The BJP has now built up a new vote bank with welfare policies (using public money for private political gain), called the “laabharthi varg” (beneficiary groups).
This was evident during the 2019 general elections too.
What was the evidence the BJP provided except claims? And what did the voters of the four states demand in evidence? Nothing. What did the voters condone in return?
Years of abject failures and gross incompetence of the BJP governments at the Centre and in these four states. There has been a massive loss of lives and livelihoods since 2016’s demonetization; the pandemic witnessed distress migration and scores of people dropping dead daily for several weeks because oxygen and hospital beds were not available and the mayhem showed up also when thousands of unclaimed bodies started floating in the Ganges or found buried in its sands in Uttar Pradesh – the most crucial state for winning the 2024 general elections with its 80 out of 543 elected Lok Sabha seats.
Why wouldn’t fake claims about the BJP being champions of SCs and STs wouldn’t work in the next election?

Photo Credits: Flickr

The original article published in Counter View can be accessed here.

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