Aadhaar-based wage system

Fourth extension for mandatory payments through Aadhaar-based wage system (ABPS) for MGNREGA workers is going to end. As per a NGO, around 1.2 crore people in top five States are not be paid wages via this method because their accounts are not enabled for the new system.

About the stance for payment to MGNREGA workers:

• Between the top five States in terms of active MNREGA workers - U.P., Bihar, West Bengal, Madhya Pradesh, Rajasthan - 1.2 crore will no longer be eligible for payments because they do not have ABPS-enabled accounts.
• In Assam which has more than 63 lakh workers, 61.2% are not eligible and in Nagaland with 6 lakh beneficiaries, nearly 80% lack an ABPS account.

Aadhaar-based wage system (ABPS):

• ABPS uses the worker’s unique 12-digit Aadhaar number as their financial address.
• APBS is a gateway created by National Payments Corporation of India to enable departments and agencies administering government schemes to transfer funds to Aadhaar-enabled bank accounts of beneficiaries.
• Objective: The basic idea of the APBS to act on the principle that a person’s Aadhaar number becomes their financial address.
• Instead of providing multiple account details to receive a bank transfer, one only has to provide their Aadhaar number which significantly eases out the entire process.
• For ABPS, a worker’s Aadhaar details must be seeded with their job card and bank account.
• Aadhaar details should also be mapped with the National Payments Corporation of India (NPCI)
• Finally, the bank’s institutional identification number (IIN) must itself be mapped with the NPCI database. 

Benefits:

• Boost financial inclusion: It sub-serves the goal of financial inclusion and provides an opportunity to the government to attempt financial re-engineering of its subsidy management program.
• Less delayed work: It eliminates inordinate delays, multiple channels & paper-work involved in the existing system making the process less cumbersome and eco-friendly and transfers benefits & subsidies in a seamless & timely manner and directly into the Aadhaar Enabled Bank Account.
• No redundancy in bank accounts: Customers are not required to open multiple bank accounts for receiving benefits and subsidies of various social welfare schemes.
• Minimize misuse of funds: APBS transfers are seen to be effective in removing fake beneficiaries and duplicates and thus minimize leakage of funds to unintended beneficiaries.

Institutional Challenges

• Diverted Payments and Rejections: Issues beyond diverted payments in Aadhaar Payment Bridge System (APBS), like rejected payments, affecting DBT recipients.
• Consent Challenge: Forcing APBS on poor without consent raises ethical concerns, especially for underprivileged beneficiaries.
• Selective Induction Guidelines: NCPI and UIDAI recommend Aadhaar-seeded account induction based on explicit customer request, protecting educated middle-class.
• Coercive Imposition on Poor: Lack of consent, improper mapping, and symbolic consent lead to APBS issues, misdirecting subsidies and pensions.