Nrega Some Facts

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Last updated: May 27, 2019

Performance Audit Report No. XXXX11 of 2008 Ministry of PowerRural Development Performance Audit of Implementation of National Rural Employment Guarantee Act (NREGA) 1 Introduction 1. 1 Overview of NREGA The National Rural Employment Guarantee Act, 2005 (NREGA) guarantees 100 days of employment in a financial year to any rural household whose adult members are willing to do unskilled manual work. The Act initially came into force in 200 districts with effect from 2 February 20061.The basic objective of the Act is to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment on demand. This work guarantee can also serve other objectives: generating productive assets, protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others.

The Act requires every State to formulate a State Rural Employment Guarantee Scheme (REGS), which should conform to the minimum features specified under the Act.According to the Act, rural households have a right to register themselves with the local Gram Panchayats (GPs), and seek employment. Work is to be provided within 15 days from the date of demand, failing which the State Government will have to pay unemployment allowance at the stipulated rates.

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The State Rural Employment Guarantee Schemes are implemented as Centrally Sponsored Schemes on a cost sharing basis between the Centre and the States. The Central Government will bear all costs, other than the following: 25 per cent of the cost of material and wages for semi-skilled/ skilled workers;Unemployment allowance; and Administrative expenses of the State Employment Guarantee Council. Detailed Operational Guidelines have been issued by the Ministry of Rural Development (Ministry), Government of India. Together with the provisions of the Act, they prescribe: the types of works that can be covered under NREGA (subject to additions in respect of different States); the minimum entitlements of labour; 1 An additional 130 districts were notified under Phase-II with effect from 15 May 2007during 2007 -08, and the remaining 266 districts have been notified under Phase-III with effect from 1 April 2008.These additional districts are not being covered as part of this Performance Audit. March 2008Performance Audit of Implementation of NREGA (Pre-Bond Copy)Page 11 Performance Audit Report No.

11 of 2008 the roles and responsibilities of different functionaries right from the State Government to the District, Block and Panchayat level functionaries, including those of the Panchayati Raj Institutions (PRIs) at various levels; the detailed procedures for planning, financial management, registration and employment allotment, execution of works, and payment of wages and unemployment allowance; he detailed records to be maintained at different levels; and the mechanisms for social audit, as well as monitoring and evaluation of outcomes. 1. 2 Organisational Structure and Funding Pattern The organizational structure for implementation of NREGA is as follows: ORGANISATIONAL STRUCTURE OF NREGA Central Employment Guarantee Council (CEGC) Advise GoI on NREGA-related matters Monitoring and Evaluation Prepare Annual Reports State Employment Guarantee Council (SEGC) Advise State Government on implementation Monitoring and EvaluationDecide on ‘preferred works’ under REGS Prepare Annual Reports Ministry of Rural Development (MORD) Nodal Ministry for NREGA implementation Resource support to States Review, monitoring and evaluation of processes and outcomes Establish MIS State Government Formulate Rural Employment Guarantee Scheme (REGS) and Rules Designate State Rural Employment Guarantee Commissioner Ensure timely release of State Share Ensure wide dissemination of information Ensure administrative, financial and technical support to implementing agencies Other Implementing AgenciesLine Departments, NGOs, Central and State Government Undertakings, and Self-Help Groups (SHGs) District Panchayat Finalise District Plans Monitor and supervise REGS in the District Execute works (other than Gram Panchayats works) Intermediate Panchayat Planning at Block level Monitoring and supervision Executing works (other than G P works) Gram Panchayat Planning of works, registering households, issuing job cards, allocating employment Executing 50 per cent of the works, and monitoring implementation of the Scheme at the village level Gram Sabha Recommend works to be taken upMonitor and supervise works Conduct social audits of implementation Forum for sharing information Ensure transparency and accountability District Programme Coordinator (DPC) Responsible for overall co-ordination and implementation of scheme in District Programme Officer Coordinate the works undertaken by Gram Panchayat and implementing agencies at Block level 2 Performance Audit Report No. XXXX11 of 2008 The Government of India (GoI) has established a fund called the National Employment Guarantee Fund, from which grants are released directly to Districts2.Revolving funds are to be set up under REGS at the District, Block and Gram Panchayat levels, with separate bank accounts being opened for such funds at each level. 2 Request for audit In August 2006, the Ministry requested a performance audit of the implementation of NREGA, in view of the importance of the Act and the programme and to provide assurance that the processes under the Act were put in place and were being adopted effectively by the State Governments.

This request was accepted, and a performance audit of implementation of NREGA, covering the initial 200 districts, was initiated during 2007-08. Audit Objectives The main audit objectives for the Performance Audit were to ascertain whether: effective preparatory steps for planning, implementation and monitoring/evaluation of outcomes were taken by the Central and State Governments; the procedures for preparing perspective and annual plan at different levels for estimating the likely demand for work, and preparing a shelf of projects were adequate and effective; there was an effective process for registration of households, allotment of job cards, and allocation of employment in compliance with the guidelines;NREGA works were properly planned, and economically, efficiently and effectively executed in a timely manner, and in compliance with the Act and the guidelines, and durable assets were created and properly accounted for; wages and unemployment allowance were paid in accordance with the Act and the guidelines, and the intended objective of providing 100 days of annual employment at the specified wage rates was effectively achieved; funds released for NREGA were accounted for, and utilized in compliance with the guidelines; here was an adequate and effective mechanism at different levels for monitoring and evaluation of NREGA outcomes; and there was an adequate and effective mechanism for social audit and grievance redressal. 4 Audit Criteria The main sources of audit criteria for the performance audit were the following: 2 Although NREGA provides for funds to be transferred by GoI to the State Governments through separate State Employment Guarantee Funds, this mechanism has, so far, not been operationalised. March 2008Performance Audit of Implementation of NREGA (Pre-Bond Copy)Page 13 Performance Audit Report No. 11 of 2008The National Rural Employment Guarantee Act, 2005 (NREGA), and notifications issued thereunder; NREGA Operational Guidelines (2006); and Circulars and letters issued by the Ministry. 5 Audit Scope, Sampling and Methodology 5.

1 Audit Scope The scope of audit was restricted to the initial 200 districts identified for implementation of NREGA. The period of audit coverage was from February 2006 to March 2007. Field audit of the relevant records of the Ministry, State Governments and District, Block and Panchayat level offices was conducted at the Ministry and 263 States between May and September 2007.Subsequently, in order to assess the improvement in maintenance of records as a result of the performance audit, a limited scrutiny of record maintenance for one month (November 2007) was conducted between February and March 2008, covering 24 GPs in 6 States from within the original audit sample. 5. 2 Audit Sampling ?In each State, 25 per cent of the NREGA districts (subject to a minimum of two) were selected.

In each district, two blocks were chosen, in each block four Gram Panchayats (GPs) were chosen, and in each selected GP, four works (preferably three completed and one ongoing) were selected for detailed examination.Thus, records relating to 68 districts, 141 blocks within the selected sampled districts, and 558 GPs in the selected sampled blocks were selected for detailed examination. The limited scrutiny, which was conducted in February- March 2008, covered 6 states, 12 districts, 12 blocks and 24 GPs, which were selected from the original audit sample. Details of the selected districts, blocks and GPs are given in Annexure –A. 5. 3 Audit Methodology The performance audit commenced with an entry conference with the Ministry in April 2007, wherein the audit methodology, scope, objectives and criteria were explained.During the meeting, the Ministry also made a presentation on the status of NREGA. After the conclusion of field audit, an exit conference was held with the team of the Ministry headed by Joint Secretary of the Ministry in December 2007, where the draft audit findings and recommendations were discussed at length.

In addition, exit conferences were also held between August 2007 and January 2008 with the State Governments, where the State-specific findings were discussed. 3 Mizoram, where NREGA was implemented in two districts, was not covered during the Performance Audit. 4 Performance Audit Report No.XXXX11 of 2008 The draft performance audit report was issued to the Ministry in December 2007. The Ministry sent its response on the draft report, and also forwarded the comments of 21 State Governments on the report in February 2008.

Further, the Secretary, Ministry of Rural Development along with her team also made a presentation highlighting their concerns relating to the issues covered in the draft report in February 2008. The concerns espoused by the Ministry during the presentation and their responses on the draft report have been suitably addressed/incorporated in the Report.Subsequent to the original audit, some of the sampled districts were revisited to check the improvement in maintenance of records in February-March 2008, covering 24 GPs in 12 blocks in 12 districts in 6 States from within the original audit sample. The results of the scrutiny have been incorporated in the Report. Audit gratefully acknowledges the cooperation and assistance extended by the Ministry, the State Governments, and their officials at various stages of conduct of the Performance Audit.

Responses of the Ministry and States The Ministry had forwarded the responses of 21 State Governments, asking audit to examine the responses and make appropriate revision to the draft report. In response to audit’s request for the Ministry’s final response on the report and not merely the individual responses of the States, the Ministry stated (February 2008) that the audit findings related to: ? either specific instances of irregularities/ deviations committed by the implementing agencies of the State Governments; or he general principles enunciated in the Act, scheme, guidelines and instructions of the GoI. As regards specific instances of irregularities/ deviations, the Ministry stated that it could not be expected to comment on the findings of the audit team, as neither was the relevant evidence (which would presumably have been made available by the implementing agencies for examination by the audit teams) available with the Ministry, nor was it reasonably practical to have such evidence examined by the Ministry, which were admittedly numerous and spread over the country.Further, the Ministry stated that the State Governments were not subordinate organs of the Government of India, but were coordinate authorities within the framework of both NREGA as well as the Constitution. , and, therefore, requested audit to proceed to finalise the observations pertaining to the States. In this regard, audit holds the view that Audit does not agree with the Ministry’s that it confines itself to the general principles of the Act and associated instructions, and has no role to play in reviewing the specific instances of irregularities/ deviations pointed out by audit.

Tthe National Rural Employment Guarantee Act (NREGA) is a Central legislation, and the Ministry, as the nodal agency for NREGA, bears ultimate overall responsibility for co-ordinating and monitoring the implementation administration of NREGA and ensuring that the funds provided by GoI are economically, efficiently and effectively utilized by the implementing agencies. However, the responses of the StateMarch 2008Performance Audit of Implementation of NREGA (Pre-Bond Copy)Page 15 Performance Audit Report No. 11 of 2008 Governments have been suitably incorporated in this report, even though the Ministry has not examined these responses and givenoffered its comments thereon.

In its presentation in February 2008, the Ministry also sought to distinguish between the force of the Act and the State Schemes on the one hand, and the guidelines and advisories issued by the Ministry on the other.According to the Ministry, while the Act and the State schemes were binding, the guidelines and advisories were merely suggestive, with scope for flexibility. The Ministry, therefore, felt that there was a need to recognize the varying authority of processes, and nuance the findings according to the appropriate classification of the process.

Further, in its response of February 2008, the Ministry stated that its advisories and guidelines were advisory and not mandatory or prescriptiveWhile audit notes the distinction between processes specified under the Act, State Schemes and, guidelines, auditit holds the view and that advisoriesthough , the guidelines and advisories were suggestive, these needed to be followed in spirit as these wereall these processes are intended to facilitate the effective and efficient implementation of NREGA and achievement of its intended objectives. Instances of deviations from, or non-compliance with the specified processes would adversely affect the Act’s implementation, and such instances noticed during field audit have been suitably highlighted in this report.In specific instances where the State Governments have consciously decided to deviate from the specified processes for compelling reasons, it is the Ministry’s responsibility to ensure that adequate and effective alternative controls have been put in place for the same purpose. 7 Physical and Financial Performance 7. 1 Physical Performance According to the Ministry’s reports, during the year 2006-07: 3. 81 crore rural households had registered under the scheme; 2. 12 crore households had demanded employment under the scheme, of which 2. 10 crore households received employment.

0. 2 crore households received the full 100 days of legally guaranteed employment. State-wise details of physical performance reported by Ministry are given in Annexure- B. 7.

2 Financial Performance The total financial assistance provided by the GoI to all the State Governments up to 31 March 2007 was Rs. 12073. 56 crore (including Opening Balance of Rs. 2052. 92 crore, Central Share of Rs. 8958. 02 crore, State Share of Rs. 813.

42 crore and Miscellaneous Receipts of Rs. 249. 20 crore). [C1] Of this, the State Governments could utilize Rs. 8823. 36 crore (73 per cent), as detailed in Annexure-C.



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