Aadhaar-based pay must for MGNREGS wages from July 1

The central government has decided to make the Aadhaar-Based Payment System (ABPS) compulsory for settling wages under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) from July 1 and informed states about it, a senior official said.

"The rural development ministry has written to states, telling them that the current mixed model of wage payment will be discontinued after June 30. No further extension of the deadline will be granted," the official told ET on the condition of anonymity.

The earlier directive for switching fully to the ABPS from February 1 had evoked protests by activists and workers, many of whom claimed that workers were being deprived of payments due to technical glitches.

The rural development ministry then decided to continue to allow payments through both ABPS and the usual electronic payment through the National Automated Clearing House (NACH) until March 31. It later extended the deadline to June 30.

The extensions, aimed at facilitating a smooth transition to the Aadhaar-based wage payment system, may have led to expectations in some quarters that further relaxation of the deadline would be coming, said another person privy to the matter.

"The Centre's letter to states seeks to dispel that sort of an impression," he added.

The NACH, set up by National Payments Corporation of India, is a fund-clearing platform that facilitates recurring interbank transactions electronically. The ABPS typically uses the Aadhaar number to identify beneficiaries for fund transfer, while the NACH uses their bank account details.

Officials said as many as 84% of the number of payment transactions in March were Aadhaar-based, up from about 78% in the previous month.

According to rural development ministry officials, the ABPS was introduced in 2017 to ensure there would be no delay in wage payments to workers due to bank account-related problems. This system also "ensures transparency" in wage payments and helps plug leakages.

Announcing the extension of the mixed payment model until March 31 on "the request of states", the ministry had on March 19 said if the beneficiary was already linked with the ABPS, then payment would be made only through this system. For the rest, it said the NACH system would continue until March 31 if the beneficiary was not yet linked with ABPS due to some technical reasons, etc.

According to the latest official data, there are 142.5 million active workers under the MGNREGS. Last month, the ministry had said Aadhaar seeding of 95.4% of these workers had been done in NREGASoft, an e-governance system that captures all the activities under this scheme. Of them, over 100 million workers have been registered under the ABPS.