COMMENTARY
provides doorstep banking services using
a micro-ATM.3 To ensure that money goes
into the right hands, the recipient’s iden-
tity is authenticated through biometrics
or smart cards. Several states, notably
Andhra Pradesh, and later Jharkhand
(see below), have initiated the BC system
with biometric authentication.
The BC model has several potential advantages. First, the use of biometrics helps to prevent one of the three forms of corruption listed above, namely, “decep- tion” of the concerned workers. It ensures that the person drawing money is the person who owns the account. Second, the BC model reduces the distance and other hassles (such as long queuing time) that workers face to withdraw their wages by bringing banking services to the vil- lage itself. Third, BCs could also speed up the disbursal of wages by reducing the workload at banks and post offices.
The Aadhaar-enabled payment system (AEPS) promoted by the Unique Identifi- cation Authority of India (UIDAI) is a variant of the BC model. Under this system, the beneficiary first gives her 12-digit Aadhaar (alias UID) number to the BC. She then presses her finger on the scanner of a micro-ATM for fingerprint authentication against the UIDAI’s Central Identities Data Repository (CIDR). Subject to confirmation that the Aadhaar number and finger- print match, the transaction proceeds.4
Motivation of the Survey
Pilot projects have recently been launched to check the efficiency and effectiveness of AEPS in four districts of Jharkhand – Ranchi, Hazaribagh, Saraikela-Kharsawan and Ramgarh. This has been done in association with three banks – Bank of India, Union Bank of India and ICICI Bank. In principle, the AEPS (or, in general, the BC model) could help streamline NREGA payments. However, much depends on how it actually operates on the ground. For instance, questions have been raised about the reliability and success rate of finger- print recognition, especially for labourers who do manual work. There are connec- tivity issues as well when the micro-ATM fails to authenticate the fingerprints in real time due to connection failure.5 Besides this, the BC system comes with its own set of issues. Will the BC be immune from
The BC model has several potential advantages. First, the use of biometrics helps to prevent one of the three forms of corruption listed above, namely, “decep- tion” of the concerned workers. It ensures that the person drawing money is the person who owns the account. Second, the BC model reduces the distance and other hassles (such as long queuing time) that workers face to withdraw their wages by bringing banking services to the vil- lage itself. Third, BCs could also speed up the disbursal of wages by reducing the workload at banks and post offices.
The Aadhaar-enabled payment system (AEPS) promoted by the Unique Identifi- cation Authority of India (UIDAI) is a variant of the BC model. Under this system, the beneficiary first gives her 12-digit Aadhaar (alias UID) number to the BC. She then presses her finger on the scanner of a micro-ATM for fingerprint authentication against the UIDAI’s Central Identities Data Repository (CIDR). Subject to confirmation that the Aadhaar number and finger- print match, the transaction proceeds.4
Motivation of the Survey
Pilot projects have recently been launched to check the efficiency and effectiveness of AEPS in four districts of Jharkhand – Ranchi, Hazaribagh, Saraikela-Kharsawan and Ramgarh. This has been done in association with three banks – Bank of India, Union Bank of India and ICICI Bank. In principle, the AEPS (or, in general, the BC model) could help streamline NREGA payments. However, much depends on how it actually operates on the ground. For instance, questions have been raised about the reliability and success rate of finger- print recognition, especially for labourers who do manual work. There are connec- tivity issues as well when the micro-ATM fails to authenticate the fingerprints in real time due to connection failure.5 Besides this, the BC system comes with its own set of issues. Will the BC be immune from
Bharat Bhatti
Timely and reliable payment
of wages under the National Rural Employment Guarantee Act is meant to be one of the initial applications of Aadhaar – the unique identity number that is supposed to be given to every resident of India. Pilot experiments with Aadhaar- enabled payment systems were initiated in Jharkhand a few months ago. This article reports the findings of an informal study of this experiment, based on a quick survey conducted in Ratu block of Ranchi district in March 2012.
Timely and reliable payment
of wages under the National Rural Employment Guarantee Act is meant to be one of the initial applications of Aadhaar – the unique identity number that is supposed to be given to every resident of India. Pilot experiments with Aadhaar- enabled payment systems were initiated in Jharkhand a few months ago. This article reports the findings of an informal study of this experiment, based on a quick survey conducted in Ratu block of Ranchi district in March 2012.
Preventing corruption in the implementation of National Rural Em- ployment Guarantee Act (NREGA) has been an important concern since the inception of the programme. In spite of a host of transparency and accountability measures (e g, public disbursal of wages, regular maintenance of “job cards” and mandatory social audits), NREGA remained vulnerable to fraud and embezzlement.1 The main vulnerability was the lack of separation between the implementing agency and payment agency under the system of cash payments, which made it possible for the implementing agency (or enterprising middlemen) to inflate muster rolls and pocket the extra wages. The introduction of bank (or post office) payments of NREGA wages around mid- 2008 was the first attempt to separate the payment agency from the implementing agency.
This, it was hoped, would end the incentive for the implementing agency to fudge muster rolls. However, three corruption opportunities remained: de- ception (manipulating workers’ accounts without their knowledge), collusion (bringing bank or post office staff, or workers themselves, into the corruption network), and extortion (forcing the workers to part with extra wages sent to their accounts after inflating the muster rolls) (Drez and Khera 2008 and Adhikari and Bhatia 2010).
Though payments through banks and post offices helped to curb corruption, they brought problems of their own. In particular, they led to long delays in pay- ment of wages, and compelled workers to travel long distances or wait for hours in overcrowded banks to withdraw wages.2
One way of dealing with the problem of distance was to introduce “business corre- spondents” (BCs) who would act as inter- mediaries between the payment agency (bank or post office) and labourers. A BC is, in effect, an extension counter of the local bank – an approved agent who
I would like to thank Jean Drèze and Reetika
Khera for their comments on earlier drafts.
Bharat Bhatti (bharatgusto@gmail.com) was the coordinator of the survey team and has participated in several field studies of NREGA since 2008.
Bharat Bhatti (bharatgusto@gmail.com) was the coordinator of the survey team and has participated in several field studies of NREGA since 2008.
16 decemBER 8, 2012
vol xlviI no 49 EPW
Economic & Political Weekly
Economic & Political Weekly
