Analysis of Payment Delays and Delay Compensation in MGNREGA

Rajendran Narayanan, Sakina Dhorajiwala, and Rajesh Golani

Abstract

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides a
minimum of 100 days of work in a year for every rural household at a minimum wage. Because
of MGNREGA, for the first time in the country, a transaction-based Management Information
System (MIS) has been made available in the public domain; a great feather in the cap of
transparency. An essential safeguard in MGNREGA is delay compensation to be paid, as penalty,
when workers don’t receive wages within 15 days of completion of work. Despite several
progressive measures, payment delays are rampant and the method of delay compensation is
flawed leading to massive under-calculation of the true payable compensation. By analysing over
9 million transactions for the financial year 2016-17 across 10 states, we observe that only 21%
of the payments were made on time. In 47% of the records analysed, only partial delay
compensation is being captured and the remaining 32% of the records are not even being
considered as delays in the NREGA MIS. These are due to the flawed method of calculating
delay compensation. On aggregate, in our sample, while the true total compensation payable is
about Rs 36 crore, only about Rs 15.6 crore is being calculated in the MIS.

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Suggested Citation:

CSE Working Paper
#5, Azim Premji University, April 2018