Electronic wage payments and capability expansion: can it deal with the moral economy of corruption in india?

Bedamatta, Rajshree (2018). 'ELECTRONIC WAGE PAYMENTS AND CAPABILITY EXPANSION: CAN IT DEAL WITH THE MORAL ECONOMY OF CORRUPTION IN INDIA?' Paper presented at the annual conference of the HDCA, Buenos Aires, Argentina 2018.


Financial inclusion has been the buzzword for reducing inequality of incomes in the post-liberalization era. In developing countries such as India, the network of banked areas has shown up as one of the important indicators of financial inclusion. For a long time now development programmes have therefore focused on the opening of bank accounts to fulfill the objective of financial inclusion and promote ‘inclusive growth’. However, the growth of banking in under-developed areas is not without hurdles and a large part of development literature concerns with social banking and alternatives to formal sector banking such as microfinance and micro-credit. In the recent years, government to person payments (G2P) through large developmental programmes has become an important engine of promoting the agenda of financial inclusion. India’s biggest rural employment programme (the Mahatma Gandhi National Rural Employment Guarantee Programme) is one such example. The introduction of electronic wage payments through bank accounts has been considered revolutionary. Digital payments have been proposed as one of the enabling factors in converting ease of wage payments into various functionings, such as financial inclusion.    

In the most recent times, conflicting reports have emerged on two counts. One shows that the programme in spite of putting a legal entitlements framework in place has not been able to make much dent in poverty. Non-revision of minimum wages, delay in wage payments, and massive corruption have been cited as some of the reasons for its non-performance. Another form of reporting led by the Digital India programme of the present government shows that the electronic payment system initiated under the MGNREGA has resulted in direct benefits to the beneficiaries under the scheme, thereby fulfilling the primary objective of timely wage payments and the secondary objective of financial inclusion.

This paper takes a critical view of the digital welfare payment system that has been pushed as one of the hallmarks of the MGNREGA programme today without paying much heed to the more serious issues of planning at the panchayat level, revision of minimum wages, and massive corruption in spite of the electronic system in place. The discussion is based on primary data collected from 300 households across 29 Gram Panchayats in three districts of Barak Valley Region of the northeastern state of Assam based on a household level survey carried out during September-October 2017. This region constitutes the three most backward districts of Cachar, Hailakandi, and Karimganj that rank very low in the human development indicators and are characterized by massive rural unemployment induced out-migration.

One of the most disconcerting observations that we came across as part of this study was the degree and depth of stress that the households faced with regard to meeting daily consumption expenditures due to lack of employment opportunities. Possession of a job card was highly sought after in spite of the fact that the jobs were not forthcoming. While households possessing job cards were found to be very high, those reporting having found employment in the MGNREGA programmes over the period of last two financial years was very low. We corroborated this with the Monitoring Information System database of the MGNREGA and there were massive mismatches. The number of days of employment generated did not match with the response rate from our sample households. There is evidence of massive job card renting at the village level.

Most households that responded having job card entitlements also had bank accounts opened for the specific purpose of receiving wage payments, thereby meeting Government of India’s objective of financial inclusion. However the block and village level functionaries have created a system in which bank transfers are made to personal accounts, yet the money is siphoned off on the moral premise that households do not have a ‘right’ on the welfare payments as they have ‘not worked’ for it. Thus electronic welfare payments system that had been forwarded as an effective tool of keeping corruption at bay has, in fact, created a complex form of moral degeneration in village economies that were hitherto relatively free of such menace. This paper also argues that there is a very high demand for jobs among the rural households through the employment guarantee programme and effective social auditing and accountability with the active involvement of civil society and the state governments can revive the MGNREGA.

Keywords: Social accountability, G2P welfare payments, electronic wage transfers, capability expansion

scroll to top