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AADHAAR PAYMENT BRIDGE SYSTEM (APBS)

01 Jan 2024 AADHAAR PAYMENT BRIDGE SYSTEM (APBS)

Posted at 12:31h in Today Current affairs by
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UPSC MAINS SYLLABUS GS2 PAPER: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation

WHY IN NEWS? 

  1. As per recent order by the Union Rural Development Ministry, from the New Year, wages under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) will be paid only through an Aadhaar based payment system (ABPS), which requires the Aadhaar details of workers to be seeded to their job cards.
  2. Rural Development Ministry data show that 34.8% of the job card holders remain ineligible for this mode of payment as on December 27, 2023.

WHAT IS ABPS? 

  1. ABPS is a bank-led payment model that allows all Aadhaar card holders to make monetary transactions at Micro automated teller machines (ATMs) or point of sale (POS) using a Unique identification number (UID).
  2. The National Payment Corporation of India (NPCI) took this initiative to promote cashless transactions in India. Their main aim was to authorize people from all sections of the society to access financial and banking services via Aadhaar.
  3. The ABPS allows users to transfer funds, deposit cash, withdraw money, check account balance, among other features.
  4. Thus the person’s Aadhaar number becomes her financial address. Now, Instead of having to provide multiple account details (say, her name, bank account number and IFSC code) to receive a bank transfer, she only has to provide her Aadhaar number.
  5. Induction of a bank account into APBS involves two distinct steps, both of which are meant to be based on informed consent:
    1. First, the account must be “seeded” with the customer’s Aadhaar number.
    2. Second, it must be connected to the NPCI mapper — a step known as “mapping”.

ISSUES FACED BY ABPS: 

  1. To increase financial inclusion, large number of Bank accounts were created & linked with Aadhaar under Jan Dhan Yojana since 2016 creating issue of superfluous accounts. 
  2. As the Government directed to bring all direct benefit transfer (DBT) payments — pensions, scholarships, subsidies, MGNREGA wages, and so on under the Aadhaar payments umbrella, it led to erroneous seedings of the accounts.
  3. Further, Aadhaar numbers were seeded into these accounts without proper verification to meet the targets.
  4. To curb the issue of errors in seeding of accounts, E- Know Your customer (E-KYC) was made compulsory which led to various issues:
    1. Difficulty faced by less technology prone rural populace to understand the procedures
    2. Problems with adequate biometric authentication
    3. Inconsistencies between the Aadhaar database and the bank database
  5. Additionally, in the state of Jharkhand, accounts have been mass mapped onto the APBS without any consent taken from the rural people thus violating their Fundamental rights under Article 21 of the Constitution.

ADVERSE IMPACT OF ABPS ON WORKERS:

  1. Delay in wage payments due to diversion of payments into another accounts.
  2. A recent study of the Indian School of Business (ISB), based on an analysis of more than 10 million
    payments in 2014-18, concludes that 38% of all the APBS payments of MGNREGA wages in Jharkhand “redirect wages to a completely unrelated account”.
  3. For Example, Premani Kunwar, an elderly widow in Garhwa district who died of hunger on December 1, 2017, two months after her pension was diverted by the APBS to someone else’s account.
  4. These problems are magnified by a pervasive lack of accountability. 

WHAT IS MGNREGA? 

  1. Launched in 2006, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) legally enshrines the “right to work” and ensures livelihood security in rural areas.
  2. It provides at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
  3. As per the act, at least 33% of the beneficiaries shall be women who have registered and requested for work under the programme.
  4. Further, since employment is provided within 5 km radius of the village, it has immense potential to bolster women’s participation.
  5. As per Periodic Labour Force Survey (PLFS-5): 59.25% of the workers who used the scheme this year were women, their highest level of participation since 2012-13.
  6. The proportion of women person-days in the total has consistently increased since 2021 (54%) to 59% (2023). 
  7. A major issue associated with MGNREGA is that it is not reflective of inflation and thus provides low wages. 
  8. Thus Parliamentary Standing Committee on Rural Development and Panchayati Raj has recommended to move away from current fixation of wages on CPI-AL (Consumer Price Index-Agriculture Labour) to Consumer Price Index- Combined (CPI-C) to be better reflective of Inflation.  
  9. At the same time, it has suggested that the Central Government shall fix uniform wage rate for all states, further bridge the wage disparity among states and prevent uncalled for outward migration from poor states (a major issue during Pandemic years).

WAY FORWARD: 

The UIDAI has taken several measures from time to time but judging from Jharkhand’s experience, however, the pathologies of the APBS continue to cause havoc on the ground. Thus, an independent and participatory review of the system is long overdue and shall be taken with immediate effect.

UPSC MAINS 2024 PRACTISE QUESTION: 

Q: Illustrate the examples of the issues pertaining MGNREGA workers in the context of Aadhaar Payment Bridge System (ABPS). Also give suggestive measures. 10 Marks, 150 words. 

 

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