On 16 September 2013, a report on a performance audit of the NREGS in Uttar Pradesh by the Comptroller and Auditor General of India (CAG) was presented in the Assembly. An earlier article in India Together drew attention to audit findings that exposed inadequate training, shortfall in personnel and weak monitoring systems that plague the scheme, as well as the unconvincing responses from the government to the CAG's objections in each of these issues..

A review of the audit findings from another angle makes us wonder why, in contravention to scheme guidelines, its implementation is still driven by planning from the top, which is out of sync with demands and realities at the ground level.

The performance audit of scheme implementation in UP discovered that in complete contravention of guidelines, the state government had fixed financial targets for NREGS works for the line departments during the period 2009-2012. The state government had directed Commissioners, Rural Employment Guarantee Schemes and District Planning Committees to sanction funds from the NREGS allocations against the proposals submitted by line departments. Audit scrutiny revealed that the target-based proposals prepared by the departments were not based on actual or realistic demands emerging from the districts. Further, it was found that the works thus undertaken did not find any mention in the District Perspective Plans or Annual plans.

In a reply to the CAG dated January 2013, the state government argued that "the objective of fixing targets was to accommodate various types of demands made by Gram Panchayats and Kshetra Panchayats". Quoting this reply, the CAG audit report states that the reply was not convincing as the works executed by line departments during the review period were neither recommended nor approved by Gram Panchayats and Kshetra Panchayats.

NREGS guidelines permitted dovetailing of NREGS funds with funds from other sources for creation of durable assets, with the caveat that the scheme funds shall not substitute departmental plan funds. Audit scrutiny, however, exposed large scale utilisation of NREGS funds for execution of different kinds of works, namely silt clearance, strengthening of canals/damaged bridges, plantations, construction and maintenance of roads etc. by many line departments.

During a test check of records, the audit came across a letter written by the Principal Secretary dated 23 April 2009, wherein he had directed the Engineer in Chief, Irrigation Department to carry out more and more works using NREGS funds and utilise the savings in departmental budgets for other schemes. Auditors pursued this further and in test-checked districts, they examined records and found that departments had created durable assets of their own involving NREGS funds to the extent of Rs 132.60 crore during the period 2007-2012.

Having noticed this violation, the CAG audit report noted without mincing words that "creation of departmental assets from NREGS funds was contrary to the principles of NREGA". Even in the face of this expose, the state government in its reply dated January 2013 argued that "the assets thus created were durable community assets". Having recorded this reply, the CAG report pronounced that the reply was not convincing as assets thus created/maintained remained with the concerned line departments.

The works executed by line departments during the review period were neither recommended nor approved by Gram Panchayats and Kshetra Panchayats.

 •  Nothing to audit
 •  NREGA workers kept waiting

The audit also observed that several works were left incomplete after incurring expenditure of Rs 41.95 crore in 12 test-checked districts and 20 divisions during the period 2007-2012. Moreover, the funds remained blocked due to low priority for incomplete works in subsequent years; the natural resource base created was not put to use either. In reply to this audit observation, the state government stated in January 2013 that non-receipt of dovetailed funds, emergence of disputes on selected works and lack of coordination between departmental authorities were mainly responsible for this.

The highest number of works executed (i.e. 5.56 lakh works or 33.75 per cent) pertained to rural connectivity rather than water conservation and water harvesting (1.42 lakh works or 9.16 per cent). Thus, the order of priority as per guidelines was not maintained. At the level of Gram Panchayats, the percentage of execution of lowest-priority works ranged between 12 and 79 per cent during the period under review.

It was also observed during the audit that in Kushinagar district, during the period 2008-2011, the Zilla Panchayat executed 404 works of lowest priority valuing Rs 21.75 crore (out of 425 works valuing Rs 23.13 crore); this represented 94 per cent in terms of both number and value. Guidelines had stipulated that earthen roads that are not all-weather roads and are non-durable shall not be taken up. However, 2265 earthen road works (valuing Rs 15.60 crore) out of 8900 works in all were executed during the period 2007-2012, in 405 Gram Panchayats in 18 test-checked districts.

Pic: http://nrega.nic.in

There was short payment of wages, amounting to Rs 4.50 lakh in works executed in 17 Gram Panchayats, 6 Kshetra Panchayats, 2 Zilla Panchayats and one line department, since the workers were paid wages at a lower rate. During scrutiny of records, auditors also came across instances of irregular payment amounting to Rs 22.29 lakh and probable fraudulent payments, amounting to Rs 5.08 lakh. In reply to these audit findings, the state government claimed that short payment of wages in concerned districts was due to late receipt of Government Orders (GOs) regarding wage revision. No replies were furnished regarding other instances of irregular payment or fraudulent payments.

In almost all the Gram Panchayats and Kshetra Panchayats of 18 test-checked districts for the period 2009-2012, there were instances of works where the material component was more than the prescribed limit of 40 per cent. Thus, a sum of Rs 104.52 crore was incurred on material components in excess of the prescribed limit. This led to short generation of 1.03 crore person days of employment at the wage rate of Rs 100 to Rs 120 per day. In order to provide a deterrent for such violation, the scheme guidelines prescribed that such expenditure should have been made good from the state government's budget.

What did the state government say in reply to this audit finding? A single line from the auditor says: "the state government did not furnish any reply to this observation".

Audit guidelines further prescribed that a Project Completion Report (PCR), a photograph of the work completed and a Social Audit Report should be placed in the file of the concerned work. Scrutiny revealed that no PCR was found in the records in respect of 3091 works, valuing Rs 38.22 crore that were carried out in 363 Gram Panchayats from 16 test-checked districts. For 3483 works in 17 test-checked districts, valuing Rs 43.91 crore, there was no record of Vigilance and Monitoring Committee or social audit reports. Further, 4242 works, valuing Rs 51.48 crore in 444 test-checked Gram Panchayats during the last five years, were not handed over to the user groups till March 2012.

Social audits are often informed by issues that are voiced by the local community. However, some of these issues such as short or fraudulent payment of wages, violations of scheme guidelines and non-maintenance of wage-material ratio that are reported in the performance review by the CAG could also be taken up in the social audits. The replies filed by the state government seem to imply that there is no hope of seeing any lasting change until the social audit and the performance audit by the CAG of India start creating a feedback chain.