Topic 1 : Faulty compulsion: On the issue of MGNREGS and Aadhaar seeding.
Context: Issues with Aadhaar-seeding are a headache for MGNREGS beneficiaries
Introduction
- With the government refusing to extend the deadline for Aadhaar details of workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to be seeded to their job cards beyond December 31, 2023, to enable payments through an Aadhaar-based payment system (ABPS), the system has now become mandatory.
Effect of the decision.
- Alarmingly, the decision would now affect nearly 35% of job card holders for this mode of payment and 12.7% of “active” workers (those who have worked at least one day in the last three financial years), thereby putting a dampener on the demand-driven scheme for many.
| Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA)Mahatma Gandhi National Rural Employment Guarantee Act 2005 or MGNREGA, earlier known as the National Rural Employment Guarantee Act or NREGA, is an Indian social welfare measure that aims to guarantee the ‘right to work’.It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to at least one member of every household whose adult members volunteer to do unskilled manual work.Women are guaranteed one third of the jobs made available under the MGNREGA. |
Union government claims, and its analysis!
- ABPS implementation, the Union government claims, will ensure that payments are quick, reduce rejection and plug all leaks.
- The government also contends that as the ABPS has been in place for MGNREGS from 2017, and because Aadhaar number availability is near universal in India, the ABPS is a robust and a safer way to transfer wages.
- However, the over-reliance on technical tools has resulted in problematic implementation, with beneficiaries devoid of a proper recourse for corrections in the system.
- Data analysed by LibTech India suggest that the names of 7.6 crore workers have been deleted over the past 21 months due to discrepancies between the Aadhaar and the job card, among other reasons, with many of these done erroneously.
Other issues with the ABPS
- There are other issues with the use of the Aadhaar-based payments — where errors in any step of the process result in payment failures.
- Apart from the spelling discrepancy issue between the Aadhaar and the job card of the worker, there is also the problem of mapping the Aadhaar to the wrong bank account for many. In a number of cases, payments can be diverted to some other account than the one beneficiaries prefer, and also without their consent.
- Claims by the government that Aadhaar use has reduced delays in wage payments have also not been borne out, according to LibTech India, with wage delays largely due to insufficient funds in the first place.
- Without cleaning up Aadhaar seeding and mapping with bank accounts, making the ABPS mandatory will only create further issues.
Way forward
- The Union government must revisit this decision and work out a way to correct the faulty seeding and mapping problems before imposing ABPS.
- The Ministry of Rural Development has said that it may consider an exemption from ABPS on a case-to-case basis for gram panchayats if there are technical issues, but it would be better if the Ministry conducts social audits to ascertain the extent of the problem before insisting on ABPS.
MGNREGS remains a vital demand-driven welfare scheme that helps the rural poor and its implementation must not be dependent upon a faulty technological system.
Topic 2 : Growth signals: On GST revenues
Context: The indirect tax intake might be a bonanza despite some momentum loss.
Introduction
- The Goods and Services Tax (GST) has yielded close to ₹1.65 lakh crore in gross revenues in the last month of 2023. As the Finance Ministry has highlighted, this is the seventh occasion in this fiscal year that GST revenues were over ₹1.6 lakh crore.
- The first nine months of 2023-24 have clocked a 12% rise in GST collections, with the monthly intake averaging ₹1.66 lakh crore, from ₹1.49 lakh crore in 2022-23.
Positive signs
- There is a good chance that the tax, which North Block mandarins have often lamented has not delivered as much revenue as was anticipated at the time of its launch, may end up bestowing a bonanza to the exchequer this year.
- The Budget had factored in monthly GST revenues of around ₹1.59 lakh crore, so maintaining the current rate should translate into an additional inflow of ₹80,000-odd crore.
- While this may provide some buffer for any fresh pre-poll handouts from the Centre ahead of the general election, an expected slowdown in the final quarter of the year may moderate the gains.
| Goods and Services Tax (GST)GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country. |
Growth number, GST collections and headline numbers!
- The Reserve Bank of India’s projection was for growth to taper off from 7.7% in the first half of the year to 6.5% in the October to December 2023 quarter and further to 6% in the current quarter.
- December’s GST collections for transactions undertaken in November indicate some moderation in momentum already.
- Both the headline number and the growth rate for December were the lowest in three months.
- In fact, the 10.3% growth was far weaker than the 15.1% recorded a month earlier, and just marginally better than September’s 10.2% uptick, which in turn marked a 27-month low. Deepavali, which was closer to the middle of that month, should have spurred some last minute spending boost, but that effect seems to have been insipid.
- Revenues from domestic transactions grew 13% in December, down from the 14-month high growth of 20% in November, suggesting that the initially healthy festive fervour may have partly hit the ‘snooze’ button.
Resilient domestic consumption
- The government has emphasised resilient domestic consumption steered the economy despite global headwinds. Indicators such as car sales, which crossed the four-million mark in 2023, led by high-end sport utility vehicles, can buttress that belief.
Conclusion
- But with rural demand likely to be fragile amid bleak prospects for the farm sector, and the festive push already in the past, policymakers, for whom this is the last month of official data to base their Interim Budget premises on
- , must note the slowing pace while factoring in the additional inflow that seems set to exceed expectations.
