CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The Aadhaar-Based Payment System (ABPS) has become a significant topic of discussion in India, particularly since it became mandatory for wage disbursements under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) starting January 1, 2024. The system aims to enhance efficiency and transparency in wage payments, but recent studies have raised concerns regarding its effectiveness when compared to traditional bank account-based methods.
About Aadhaar-Based Payment System
ABPS facilitates direct wage payments to workers linked to their Aadhaar numbers. This requires workers to link their Aadhaar numbers with their job cards and bank accounts. Initially introduced in 2016 as an optional system, the government’s move to make it mandatory was designed to streamline payment processes and reduce delays.
Findings On Payment Efficiency
A study published in the Indian Journal of Labour Economics reviewed over 3 crore MGNREGA transactions and found that there was little difference in the timeliness of payments between ABPS and traditional bank accounts. Approximately 39% of ABPS payments were processed within seven days, while 36% of payments made through bank accounts were similarly processed. Payment rejection rates were also comparable, with ABPS at 2.1% and traditional accounts at 2.85%.
Challenges For Workers
Some workers have faced issues such as wage misdirection and exclusion from the payment system due to mismatches between their job card details and Aadhaar. The centralized nature of ABPS has made it harder to resolve these issues quickly, while localized problems with traditional bank accounts can often be addressed more efficiently.
Complexity In Payment Process
To use ABPS, workers need to complete multiple steps, including linking their Aadhaar numbers to their job cards and bank accounts. The process requires coordination with the National Payments Corporation of India (NPCI) to ensure proper mapping, and this complexity can sometimes lead to delays and confusion for workers.
Government's Justification For ABPS
The government defends ABPS, claiming that it improves transparency, accelerates payments, and enhances tracking of funds. However, the study suggests that the primary cause of payment delays may stem from insufficient funding, rather than flaws in the payment system itself.
ABPS And Financial Inclusion
ABPS is part of a larger initiative aimed at increasing financial inclusion in India. The Aadhaar Enabled Payment System (AePS) allows basic banking services, such as cash deposits, withdrawals, and fund transfers, using Aadhaar, and the government hopes this will extend financial services to a larger portion of the population.
Exemptions And Technical Issues
The government has stated that in cases of technical problems or Aadhaar-related issues, exemptions from ABPS may be granted. This has been a point of contention, with opposition parties arguing that the system could potentially exclude vulnerable populations from receiving their due wages.
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