Multiple bank visits, repeated rejections and biometric errors mar payment system, says study.
For most rural workers dependent on the Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS), their labour does not end at the work site. According to a study by LibTech India released on Wednesday, many of them are forced to make multiple trips to the bank, adding travel costs and income losses, and face repeated rejections of payment, biometric errors and wrong information, just to get their hands on their wages.
For example, take a worker in Jharkhand who puts in a week of hard labour to earn ₹1,026 which the government credits directly into her bank account. The study found that almost 40% of the workers must make multiple trips to the bank branch to withdraw their money.
It costs an average of ₹53 a trip, and as the branch is usually at the block headquarters a significant distance from her home village, and the time spent at the bank is three to four hours, a worker will also lose the day’s wages while she attempts to withdraw her money. Paying ₹100 for travel for two trips, plus ₹342 for lost wages, plus about ₹25 for food, the worker may spend ₹392, effectively shelling out a third of her weekly wage just to withdraw it.
“Even in regular times, these last mile challenges make it hard for workers to access their own wages in a timely manner. During the COVID-19 pandemic, the situation is exacerbated as transport becomes harder, and there is no question of physical distancing at a rural bank,” says LibTech researcher Sakina Dhorajiwala, who is one of the lead authors of the report.
The study, based on a 2018-19 survey of almost 2,000 workers in Jharkhand, Andhra Pradesh and Rajasthan, was sponsored by a research grant from Azim Premji University. “In the two years since we did the survey, there has been little change in the number of bank branches per capita in rural areas, so most of these challenges remain. There is only one branch per 20 gram panchayats,” she said.
Also read | Fund crunch hits MGNREGA scheme
The study found that only one in 10 workers get an SMS message that their wages have been credited. A third of workers must visit the bank branch just to find out whether their wages have been credited. Another quarter of respondents said despite being informed that their wages had been credited, they found that the money was not in the accounts.
At the bank, 42% of respondents from Jharkhand and 38% from Rajasthan had to spend over four hours to access their wages. Only 2% of Andhra Pradesh workers faced such a long delay. Overall, 45% of respondents had to make multiple visits. Average travel costs for each visit amounted to ₹31, even without taking wage losses into account.
Customer service points and banking correspondents were meant to reduce the gap between workers and banks and bring service delivery to the doorstep. It is true that travel costs are lower at ₹11 per trip, although multiple visits are still needed in 40% of cases. However, 40% of workers reported facing biometric authentication failures at least once in their last five transactions at such agencies, and 7% reported that all five of their last transactions had failed due to biometric authentication issues.
Almost 13% of workers had rejected payments, which are transactions that are stuck due to technical errors of the payment system, bank account problems or data entry errors. About 77% of them had no idea why their payments had been rejected, which means that rectification is not possible and all future MGNREGS payments to these individuals will also be rejected. In fact, government data show that about ₹4,639 crore worth of payments were rejected in the last five years, and about ₹1,236 crore is still pending to be paid to workers.
“The pandemic has caused a situation where people are desperate for work. But we have found that people who have faced repeated, unresolved rejections simply lose faith in the system, and drop out of the workforce. Why should they work if they cannot get paid?” said Ms. Dhorajiwala.