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Challenges in Recovering Misappropriated Funds in MGNREGA

Challenges in Recovering Misappropriated Funds in MGNREGA


The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has long faced criticism for alleged corruption within the program. To combat this issue, social audit units were established to detect cases of malpractice and misappropriation. However, the recovery of embezzled funds has been a challenge, with abysmally low rates of recovery, threatening the credibility of the audit process.

Low Recovery Rates

Women engaged in desilting work of a percolation pond under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in Salem district. File | Photo Credit: E. Lakshmi Narayanan

The statistics available with the Union Rural Development Ministry reveal a concerning trend:

  • In the ongoing financial year, social audit units flagged misappropriation amounting to ₹27.5 crore. After corrective actions, the recoverable amount was reduced to ₹9.5 crore, of which only ₹1.31 crore (13.8%) has been recovered.
  • In the previous financial year 2022-23, misappropriation of ₹86.2 crore was flagged, but only ₹18 crore (20.8%) was recovered.
  • In 2021-22, a significant misappropriation of ₹171 crore was flagged, with only ₹26 crore (15%) recovered.

The Role of Social Audit Units

Section 17 of the MGNREGA Act empowers gram sabhas to monitor the execution of works. Each state has social audit units meant to work independently of implementing authorities. These units play a vital role in detecting irregularities and misappropriation.

Challenges Faced by Social Audit Units

A seminar held by the Ministry to assess the situation revealed several challenges faced by social audit units:

  1. Funding Shortage: Many units operate without sufficient funds, making it difficult for them to function effectively.
  2. Lack of Training: Inadequate training and personnel hinder the ability of these units to carry out their responsibilities effectively.
  3. Recovery Responsibility: While social audit units flag cases of malpractice, the responsibility for recovering embezzled funds and reprimanding officials falls on the State governments.

The Impact on Credibility

The dismal recovery rate threatens the credibility of the audit process, rendering it ineffective. The lack of funds and support for social audit units compromises their ability to perform their vital functions.

States Reporting “Zero Cases”

Some states have consistently reported “zero number of cases” and “zero recoveries” over the past three years. This includes states like Gujarat, Goa, Meghalaya, Puducherry, and Ladakh. Such states raise concerns about the absence of monitoring and vigilance.

Call for Action

Civil society and stakeholders have emphasized the need for adequate funding and support for social audit units. The central government’s withholding of funds for MGNREGA in states with low social audit activities compounds the issue. Urgent measures are required to strengthen these units and ensure they can effectively combat corruption within the program.

Source: The Hindu – Abysmally Low Recovery Rates in MGNREGA Corruption Cases Flagged by Auditors

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