Context:
The Ministry of Rural Development said that workers will get exemption on a case-to-case basis from the Aadhaar-Based Payment System (ABPS) in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
About:
- The Union Rural Development Ministry’s report highlighted that 34.8% of the registered workers and 12.7% of active workers remain ineligible for ABPS payment method.
MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme)
The MGNREGS provides a legal guarantee for 100 days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage.
About Aadhaar-Based Payment System (ABPS):
- It is a payment system based on Aadhaar numbers issued by UIDAI & IIN (Institution Identification Number) issued by NPCI.
- It is used by the Government Departments and Agencies for the transfer of benefits and subsidies under Direct Benefit Transfer (DBT) scheme launched by Government of India.
- It is a unique payment system implemented by National Payments Corporation of India (NPCI).
- It is a bank led model which allows online interoperable financial inclusion transaction at PoS (Micro ATM) through the Business correspondent of any bank using the Aadhaar authentication.
• The only inputs required for a customer to do a transaction under this scenario are: –
- Bank Name
- Aadhaar Number
- Biometrics captured during enrolment
Objectives:
- To empower a bank customer to use Aadhaar as his/her identity to access his/ her respective Aadhaar enabled bank account.
- To perform basic banking transactions like cash deposit, cash withdrawal, intrabank or interbank fund transfer, balance enquiry and obtain a mini statement through a Business Correspondent.
- To sub-serve the goal of Government of India (GoI) and Reserve Bank of India (RBI) in furthering financial inclusion.
- To facilitate disbursements of Government entitlements like NREGA, Social Security pension, Handicapped Old Age Pension etc.
- To facilitate inter-operability across banks in a safe and secured manner.
ABPS mandatory for MGNERGS:
Under ABPS, workers’ 12-digit Aadhaar numbers are linked with their job cards as well as their bank accounts.
- The system was first made mandatory with effect from February 1, 2023.
With no extension granted to states beyond Dec 31, the ABPS became mandatory from Jan 1, 2024.
The mixed route of ABPS and National Automated Clearing House (NACH) viz. an interbank system, will be used for bulk payments such as subsidies and salaries.
The wage payment of unskilled workers through ABPS ensures the payment of beneficiaries into their bank accounts, even in case of frequent change of bank account by the beneficiary.
Case by case exemption:
- In case, if any gram panchayat of a district in the state is having either technical problem or Aadhaar-related problem, the Government of India may consider exemption from APBS on case-by-case basis till the resolution of the issue.
Issues with ABPS System:
High job card deletion: The push for the new system has also led to a high rate of job card deletions, as evidenced by anecdotal evidence and ground reports.
- As per Lib Tech India reported that 7.6 crore workers have been deleted since April 2022.
Transaction failure: ABPS has been plagued by a high transaction failure rate.
- According to the recent study showed that around 34% of ABPS transactions fail on an average such as biometric mismatch, bank system failures, internet connectivity, and lack of sufficient balance.
Lack of infrastructure: The successful implementation of the Aadhaar-based payment system requires robust technological infrastructure.
Remote area adoption: In many remote areas, these infrastructure elements may be lacking or unreliable, hindering the effective adoption and usage of the system.
Way forward:
- Invest in infrastructure development: Strengthen internet connectivity, power supply, and technological infrastructure in rural areas to support ABPS operations.
- Improve transaction success rate: Address factors contributing to transaction failures, like biometric authentication issues, bank system errors, and insufficient funds. Consider training and support for Banking Correspondents (BCs) to handle transactions effectively.
- Promote financial literacy: Conduct awareness campaigns to educate MGNREGS workers about benefits and usage of ABPS, Aadhaar, and digital transactions.