Government cuts penalty on delayed wages under MGNREGS

NEW DELHI: The Centre has decided to slash the heavy penalty for delayed payments under the United Progressive Alliance government's flagship social sector scheme - the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) - worried that states may slacken in implementing the scheme ahead of polls.

The Jairam Ramesh-headed ministry had in September this year introduced a flat 25% penalty on delays over 15 days in payments to workers to address the issue of delayed payments. Wage payments worth 2,700 crore, 25% of the total payments, are delayed beyond the stipulated 15 days.

"There was lot of opposition from states. They were asking for much lower penalty as delays in payments would put a lot of financial burden on them," a senior government official told ET.

The ministry has cut the rate to 0.05% of the wages delayed per day and a notification will be issued shortly, the official said.

Under the new rules, MGNREGS beneficiaries were to be compensated in case of delays beyond 15 days of closing the muster roll and the functionaries or agencies responsible had to pay for the delay. The penalty compensation was equivalent to one-fourth of pending wages for delays of 15 days after the closure of muster roll and half of pending wages for delays beyond 30 days.

However, this could have hurt states such as Andhra Pradesh, Tamil Nadu, Uttar Pradesh and Odisha, which are top performing states for the scheme. For instance, Andhra Pradesh alone has delayed payments worth 24 crore since 2011 out of which 15.7 crore is on account of functionaries while the remaining 8.17 crore is because of delays from the banks.

The Centre also fears that high penalty could have hurt implementation of the scheme itself, something that the poll-bound government cannot afford.

The MGNREGA promises 100 days of work each year to every rural household.