With the CAG finding irregularities in implementation of its flagship National Rural Employment Guarantee Scheme (NREGS), the Government has decided to stop direct cash payment to the beneficiaries and open bank accounts to transfer their wages.
From The Financial Express. Contrast this with the now puny seeming call for all banks to open up 250 "no frills" savings accounts for un-banked customers at each branch by the Committee for Financial Inclusion (and repeated by the Committee for Financial Sector Reforms).
In the short term this will certainly put a huge amount of strain on the banking system and create massive delays in for end beneficiaries. On the other hand, over the long run this has the potential to result in more households being financially included and a banking system which is more responsive to the needs of the poor. Professional bias prevents me from evaluating which of these two effects is more important.
On an aside, does anyone have any idea why Singh mentioned only bank accounts and not post office money orders? The AP government is currently distributing NREGA wage payments via post office money orders in some districts.
1 comments:
Just read this article on NREGA in Andhra Pradesh where they disburse payments through post office accounts. The number of accounts has increased from 6 lakh accounts to 70 lakh accounts in less than 3 years.
http://thinkchangeindia.wordpress.com/2008/04/01/a-new-software-that-keeps-politicians-as-honest-as-possible/
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