Centre to scrap MGNREGA caste-based wage payments

MoRD directed to revert to single muster, single FTO

The Centre has decided to scrap the system of caste-based wage payments in its flagship Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme after complaints from State Governments.

In an order dated November 1, the Finance Ministry directed the Rural Development Ministry to “revert to the previous system of generating single muster, single FTO [or Fund Transfer Order] and transferring money into a single NeFMS [or National Electronic Fund Management System] account”.

However, a revised accounting procedure will now be implemented to allow expenditure to be captured under three Minor Heads for Scheduled Castes and Tribes and others, through a single FTO, said the order, which The Hindu has seen a copy of. The Ministry of Rural Development (MoRD) has been told to set a date on which the new process will come into effect.

The Hindu had reported that the Centre planned to revoke its controversial caste-based wage system after State Governments warned of rising social tensions in an October 11 meeting.

The contentious directive issued on March 2 by MoRD, on instructions from the Finance MInistry, had asked States to generate three separate FTOs for each of the three caste groups for every muster roll at an MGNREGA worksite. Three sanctions would then be generated and then payments would be made into three separate accounts of the State government.

In a meeting with the Finance Secretary and Expenditure Secretary on October 11, MoRD Secretary N.N. Sinha said that “many States have conveyed difficulties being faced by them due to the new process”, said a note attached to the Finance Ministry order. “This has not only multiplied the work at all levels but also resulted in payments going at different times to different communities”, it added.

In many villages, there were social frictions among communities who got paid as much as two months later than others from the same muster roll, according to reports from workers’ unions. A study by LibTech India analysing 18 lakh FTOs over the last six months in ten States found that SC and ST workers were getting paid significantly faster than those from other communities. Several State governments, including Karnataka, Tamil Nadu, Andhra Pradesh and Telangana, raised the issue with the Central government.

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