The former Union rural development minister Nitin Gadkari caused 'psychological' damage to the Mahatma Gandhi Rural Employment Guarantee Programme (MGNREGS) with statements questioning the need to continue the scheme across the entire country, the ministry has assessed in its new report.

Gadkari was minister for rural development in the Democratic Alliance (NDA) government till early November when Prime Minister Narendra Modi reshuffled the Cabinet.

The ministry, in the note for reviewing the delayed payments and the failing health of the scheme, referring to it a 'psychological issue', has said the "fear that the programme would be wound up/money won't come due to the statements made by the then minister for rural development" was one of the reasons that led to delay in wages to the poor who had worked under the scheme across the country. Though, it was not just empty statements that hit the programme. The ministry's review notes that the release of funds under MGNREGS by the Union government to the states was delayed by several months which continues to have an impact till date.

The delayed release of funds led to an artificially-lowered demand, as well as the work generated under the scheme through the year, the ministry data show.

The delay in payment of wages to the poor under MGNREGS now sits at its worst since the law enforcing guaranteed rural employment was passed in 2006. Wages amounting to Rs 10,752 crore stood overdue to the poor across the country as on January 8, 2014. Rs 1,323 crore has been pending for more than three months now.

By the beginning of January, only 29.08 per cent people had been paid their wages on time - within the stipulated 15 days of finishing their work.

The delay in transfers, payments to beneficiaries and the minister's statements collectively led to a dramatic crash of the scheme across the country, the ministry's data show.

In December 2013 alone 15.36 million households had been provided work. In December 2014, only 4.6 million households got work under the scheme - less than a third of the previous year. Not more than 12 days of work and wages were provided to the poor rural households on an average between August and December.

The gap between the work projected by the rural development ministry for the period and what was actually provided under the scheme continued to widen all through August-December. In December alone, the ministry had projected that poor people would work and be paid for 146.82 million workdays. Instead, delayed payments, the 'psychological impact' of the then rural development minister's statements and artificially suppressed demand and supply of works led to only 49.07 million workdays of work being generated. This when the summer demand for work had outstripped the projections.

Officials of an eastern state, speaking to Business Standard on condition of anonymity said, "No panchayat leader or district magistrate likes to be in a situation where work has been done and payments are not made for months. This forces them to cut down on work generation and artificially suppress demand. Besides, people also stop looking to the scheme for work." He said the central minister's (then Gadkari) statements had set off rumours that the scheme would be wound up in many parts of the country. Two senior bureaucrats in north Indian states, speaking to Business Standard shared similar views.

This is reflected in the ministry's assessment, too. The ministry review suggests it should now spread the message about the continuation of the scheme through its regional workshops.

By the beginning of January, 18 states had generated less than half the workdays generated for the poor last year, and 27 states had generated less than 75 per cent workdays than the previous year. Only Goa had created more work for the poor than the previous year. But, Goa has a small sanctioned amount - Rs 36.95 crore - which was transferred to the state in October and later.

The rural development ministry in its critical assessment notes Gadkari's statements coupled with other events have hit the scheme. Many of these were actions of the Central government.

The ministry assesses that the funds released in April (from the Union government to the states when the United Progressive Alliance was in power) were made only for the arrears of the previous year and the month of April 2014. After the NDA took over in May, the next release of funds was made only in August. The ministry notes, "As a result, there was no money in any state to pay wages in the peak period of April, May, June and July. Even the amounts released in August were used for paying liabilities of April-July. The delay, therefore, has carried on through the year."



Even after the funds were cleared by the ministry the sanction orders to move the funds to state exchequer took more time. The delayed sanction orders were followed by yet more inordinate delay in making the actual transfer of funds to state governments.

The review also records that the states, too, took time to put funds in the specific account meant to cater to payments under MGNREGS. The review records other procedural issues at state and central levels too for the delay in payments to the deserving.