CHAPTER III Page 1 of 26

CHAPTER - 3
MINISTRY OF RURAL DEVELOPMENT
Department of Rural Development

4. Rural Employment Generation Programme

Highlights

The performance audit of Jawahar Rozgar Yojana and Employment Assurance Schemes in the Ministry and 25
states disclosed that the shortcomings in the critical areas of targeting, adequacy of resources leading to
insignificant employment generation, evidence of employment actually generated and assets created, and
fictitious reporting continue to persist despite the recommendations of the Public Accounts Committee
(Report of the PAC on NREP - April 1987) and the Estimates Committee (Report of Estimates Committee –
April 1993) to take measures to strengthen the system of implementation, controls and monitoring.

Despite Comptroller and Auditor General’s Audit Reports having brought out the various lacunae in 1990,
1995 and 1997, the objectives of these rural employment programmes have not been fulfilled, due to the
unsatisfactory execution of the programmes.

The Ministry has not been able to address satisfactorily the issue of targeting the rural families below poverty
line for providing employment under Jawahar Rozgar Yojana and registration of employment seekers under
Employment Assurance Scheme. Neither has the registration been carried out nor have family cards been
issued to the beneficiaries under the scheme. Employment has, therefore, been provided to unregistered
workers and in most cases they either did not have family cards or where these were available, the
employment details were not noted in them. Thus, there was no certainty if the intended population which
was to be provided employment under the schemes was actually targeted in a comprehensive manner nor if
the persons provided employment had actually fulfilled the criteria for grant of wage employment. Infact, the
criteria laid down for targeting are too complex for easy implementation.

The resource provided in the budget was too meagre to provide employment to the target BPL families (JRY:
Estimated BPL population divided by 5 (assumed no. of members) to provide employment to one member in
each family (pl. see paragraph 6.3). Even by macro consideration, the wage component of the funds provided
under JRY and EAS were sufficient to provide only 15 and 16 days of employment to target population and
registered workers respectively. This level of additional employment generated under the programmes did not
make any significant difference in either tackling rural unemployment or alleviating rural poverty.

The reports sent by DRDAs and state governments both on the amount of expenditure and employment
generated were not genuine. In most cases the employment generation reported by the state governments
were based only on arithmetic calculation. They reported the employment generated as the figure arrived at
by dividing the wage component of the total expenditure with the minimum wages rather than on the basis of
actual count of muster rolls. Sample micro checks disclosed large variations between the employment figures
reported and actually provided. Similarly, the reports of expenditure under the programmes were also
erroneous since amounts advanced to implementing agencies, kept in various deposits/banks, diverted to
other programmes, etc. were also treated and reported as expenditure under the programme. Even in the
calculation of the employment generation theoretically worked out such deposits were reckoned as
expenditure.

The actual employment generated under the programme to each BPL worker/employment seeker, as
evidenced through sample micro-checks was between two and 27 days per annum under the JRY and
between one and 84 days under EAS. The average number of days for which each BPL worker/employment
seeker got employment ranged only between 7 and 21 days under JRY and between 9 and 18 days under EAS
respectively. Such few number of days of employment cannot be expected to make any significant difference
to the magnitude of unemployment in the rural areas nor to the attendant objective of rural poverty alleviation.
CHAPTER III Page 2 of 26

Evidence of actual employment generation is established through muster rolls, which contain the names and
other details of the persons who are provided employment, works on which employment is provided. The
details also include inventory of assets linked to the muster rolls with secondary evidence in the form of
registration of employment seekers and maintenance of family cards of the employment seekers. None of
these have been maintained in a systematic manner. Viewed in the context of theoretical reporting of the
employment figures, absence of evidence of employment generation casts a doubt on the actual employment
generation under these programmes.

There has been a multiplicity of programmes on rural employment running in parallel, sometime overlapping.
Frequent resort has been made to revamping the schemes and rechristening them. However, no genuine
effort seems to have been made to ensure proper implementation at the ground level and proper monitoring.
Much of the over Rs 33000 crore spent on these programmes since 1992-93 have not borne desired results.

Monitoring of the implementation and execution of the programmes was unsatisfactory. If there had been
effective monitoring at the Central and State levels much of the repeated failures could have been avoided.
The emphasis seems to have been on spending the money and on collection of data on employment
generation without verifying the accuracy thereof. Effective attention of the Ministry of Rural Development or
the state governments was not attracted even when it was evident from year to year that the full money was
not spent, unreliable data on the generation of employment was being received, non-permanent assets were
statedly being created and that there was inefficient targeting of the poor and leakages all around.

Other shortcomings noticed in implementation of the programme related to diversion of funds to other
programmes, works undertaken which were not approved under the programme, misappropriation of large
amounts of funds, delay in payment of wages and payment of wages at lower than the minimum wages, non-
adherence to the stipulated minimum 60 per cent of the total expenditure on wage component to maximise
the primary objective of employment generation, failure to prepare and follow the shelf of projects and annual
action plans, engagement of contractors for JRY/EAS works depriving employment generation which could
be provided in the contractors margin, creation of non-durable assets, particularly rural kachcha roads,
abandoned works, non-utilization and non-maintenance of assets created under the programmes, etc.

With a view to ascertaining the beneficiary perception, not ordinarily available from the documents maintained
by government departments, a beneficiary survey across the country was commissioned by Audit. It was
carried out by ORG Centre for Social Research. The survey has substantially reconfirmed the above audit
findings. In addition, the following facts emerged from the beneficiary survey.

z the Above Poverty Line persons were also provided employment under JRY in a significant measure;

z the beneficiaries were, by and large, not aware of the general features of the scheme;

z the beneficiaries did not participate in the Gram Sabha meetings to decide on the development works
relevant to the area;

z there were larger presence of contractors in the execution of work, contrary to instructions;

z assets were created on private lands of influential people in large number of cases.

There is an urgent need to review the existing design of the programmes for rural employment/development
programmes, implementation systems, reporting and documentation formats and accountability procedures
to address the persistent shortcomings frustrating the objectives of rural employment generation and poverty
alleviation. Government should also consolidate all rural employment/development programmes run by
different ministries with a view to consolidating them for a more focused area-specific approach. Without this,
the multitude of the programmes are likely to continue in disaggregated manner and rendering it difficult to
evaluate the effectiveness of their execution and impact on rural employment generation and poverty
alleviation.
CHAPTER III Page 3 of 26

4.1 Introduction

In the context of the primacy given to the objective of poverty alleviation in the Sixth Plan, Government of India
introduced two wage employment programmes in 1980 and 1983 respectively viz. National Rural Employment
Programme and the Rural Landless Employment Guarantee Programme. While the NREP (National Rural
Employment Programme) aimed at generating additional gainful employment for the unemployed and the under-
employed in rural areas along with creation of productive community assets, the RLEGP (Rural Landless Employment
Guarantee Programme.) had an added dimension of providing employment to at least one member of every landless
labour household up to 100 days in a year. The NREP and the RLEGP were merged into a single Centrally Sponsored
programme called the Jawahar Rozgar Yojana in April 1989.

4.1.1 Eradication of poverty and generation of gainful employment has been an important component of poverty
alleviation programmes in the various Five-Year Plans. According to the Planning Commission (Ninth Five-Year Plan
(1997-2002), Volume II, Government of India, Planning Commission, New Delhi.), the incidence of poverty declined
from 54.9 per cent in 1973-74 to about 36 per cent in 1993-94. However, the absolute number of poor did not decline
significantly as there were 320 million poor in 1993-94 compared to 321 million in 1973-74. The rural poor accounted
for 244 million and 261 million respectively. The number of underemployed and unemployed persons was also
growing. Massive efforts were, therefore, needed to increase the employment levels.

4.1.2 Planning Commission had always recognised that the main determinants of poverty in rural areas were (i) lack of
income and purchasing power attributable to lack of productive employment and considerable unemployment and not
lack of employment per se; (ii) continuous increase in the prices of food, especially foodgrains which accounted for 70-
80 per cent of the consumption basket; and (iii) inadequacy of social infrastructure that affected the quality of life of the
people and their employability.

4.1.3 The “trickle-down” approach of the 3rd Five Year Plan was given up as the experience had shown that overall
growth of economy did not percolate equitably and that poor continued to remain poor. Therefore, new programmes
like Food for Work Programme was taken up during 1977-78 as a major rural employment programme to generate
additional gainful employment in rural areas and with a view to improving their income and nutrition.

4.1.4 Jawahar Rozgar Yojana: The main objective of the JRY was to provide additional gainful wage employment to
unemployed and under-employed persons, both men and women in the rural areas. It was targeted at people living
below the poverty line. Preference was to be given to the Scheduled Castes, the Scheduled Tribes and the freed
bonded labourers. At least 30 per cent of the employment was to be provided to women. JRY was a Centrally
Sponsored scheme, being implemented by the state governments. The expenditure under the programme was to be
shared between the centre and the states in the ratio of 80:20. Jawahar Rozgar Yojana fund were allocated to the
States/UTs in proportion to the per centage of India's rural poor living in the States/UTs. JRY fund was distributed
among DRDAs/ZP (District Rural Development Agencies/Zila Parishads), intermediate block panchayats and village
panchayats in the ratio of 20:15:65.

Any works that created durable productive assets could be taken up under JRY. The wage and material ratio for JRY
works was 60:40. The wages could be paid partly in cash and partly in foodgrains.

4.1.5 Employment Assurance Scheme (EAS) was started with effect from 2 October 1993 in 1778 blocks of 261
districts, in which the Revamped Public Distribution System was in operation. In 1994-95, it was extended to 409
blocks under DPAP/DDP (Drought Prone Areas Programme/Desert Development Programme) and MADA (Modified
Area Development Approach) blocks having a relatively larger concentration of tribal population. In March 1995, it was
further extended to 256 blocks out of which 233 blocks were prone to floods. The scheme covered all the 5448 rural
blocks of the country since April 1997.

The scheme aimed at providing assured employment of 100 days of unskilled manual works to the rural poor, who
were in need of employment and sought it during lean agricultural season. The secondary objective was the creation
of economic infrastructure and community assets for sustained employment generation. The assurance of 100 days of
employment was extended to men and women above 18 years and below 60 years of age, residing in the villages of
the blocks covered by EAS. A maximum of two adults per family were to be provided assured employment of 100 days
under the scheme.
CHAPTER III Page 4 of 26

All works to be taken up under EAS had to be labour-intensive, i.e. works which had a ratio of wages of unskilled
labour to equipment, materials and other skilled works of not less than 60:40. Works requiring a larger component of
materials were not to be sanctioned under the scheme, unless the excess cost of materials was provided from other
sectoral schemes.

Both JRY and EAS were Centrally Sponsored rural wage employment programmes. While the Union Government was
to bear 80 per cent of the expenditure on both the programmes, the respective state governments were to contribute
the remaining 20 per cent. The important features of the programmes were as under:

Feature JRY EAS

Year of launch April 1989 October 1993
Area of implementation Throughout the country Identified 1778 RPDS (Revamped Public Distribution System)
blocks in 261 districts, subsequently extended to 665 blocks
covered under DPAP DDP and MADA blocks. The scheme
extended in all the 5448 rural blocks of the country from Ist
April 1997.
Primary objective Provide employment to Provide assured employment for 100 days
rural population
Eligibility Unemployed / under Rural poor who were in need of employment and sought it.
employed persons below
the poverty line
Special conditions Preference to the Assured employment of 100 days to each of two members of
scheduled castes and each family in the age groups of 18-60 years.
the scheduled tribe
At least 30 per cent of
the employment was to
be provided to women.
Implementing Agency DRDA/ZPs through line DRDA / ZPs through line departments and village panchayat
departments and village
Panchayat
Secondary objectives Creation of durable Creation of economic infrastructure and economic assets for
assets sustained agricultural production and employment generation.
Wage-material ratio of Not less than 60:40 Not less than 60:40
works undertaken under
the programmes

The strategy for implementation of JRY was modified in 1993 to ensure better implementation of the programmes
during the Eighth Plan, especially to achieve the target of providing 90-100 days of employment per person in the
backward districts, where there was concentration of unemployed and under-employed persons. The implementation
of JRY was done through three different streams. The original stream of JRY was implemented all over the country.
The second stream called Intensified JRY was implemented in 120-selected backward districts , with the stipulation
that the allocation to it would not be less than Rs 700 crore, or 20 per cent of the total fund earmarked for JRY. The
third stream was for taking up special and innovative projects. In January 1996, JRY was again restructured. The
second stream of JRY was discontinued and the programme in the backward districts covered under it were merged
with the Employment Assurance Scheme. The Indira Awaas Yojana and the Million Wells Scheme, which were earlier
sub-schemes of JRY, were made separate schemes.

Persons who needed and sought employment under the EAS were required to register themselves in the village
panchayats where they were residing. A family card was to be issued to every family whose adult members were
registered. Employment provided to the members of the registered family under EAS, or any other plan or non-plan
scheme, was to be recorded in the family card.
CHAPTER III Page 5 of 26

Under both the schemes, the Ministry released the central share of the funds directly to the DRDAs / ZP. The state
governments were required to release their share to DRDAs within 15 days of the central release.

4.1.6 From 1 April 1999, JRY has again been restructured and named Jawahar Gram Samridhi Yojana with the
primary objective of creation of demand driven community and village infrastructure and generation of supplementary
employment for the unemployed rural poor as secondary objective.

4.1.7 Total expenditure by the Union and state governments on all Centrally Sponsored rural employment generation
programmes which included Food for Work Programme, NREP, RLEGP, JRY (Jawahar Rozgar Yojana) and EAS
(Employment Assurance Scheme) from 1977-78 to 1998-99 was as under:

Period Allocation Expenditure(Rs in crore)

Total Portion of JRY/EAS (1989-99)
V Plan (1977-80) 479.00 511.91 ----
VI Plan (1980-85) 1620.00 1867.25 ----
VIII Plan (1985-90) (JRY was launched in 1989-90) 8117.91 7809.93 2458.08
Annual Plan
1990-91 2627.80 2588.52 2588.52
1991-92 2620.90 2663.23 2663.23
VIII Plan (1992-97) (EAS was launched in October 1993) 25205.02 22786.74 22786.74
Annual Plan
1997-98 4960.96 5344.35 5344.35
1998-99 5083.70 5249.08 5249.08
Total 50715.29* 48821.01 41090.00**

* Initially the allocations under EAS was made estimating 60 per cent of each agricultural labourers requiring
employment for 100 days and taking wage rate of Rs 35 per manday. Thereafter allocation was made on demand
from States.

** Constitute 84 per cent of total expenditure on rural employment programmes during 1977-99.

4.2 Organisational arrangement

4.2.1 Organisational structure of the Ministry of Rural Development and other agencies responsible for the
implementation of these rural employment programes is as detailed below:

4.3 Scope of audit

4.3.1 Reviews of implementation of the two schemes had been included in the Reports of the Comptroller and Auditor
General of India in the past. Some of the more important observations contained in the previous Reports included.

z Error in reported employment generation under the programmes due to a general tendency of the state
governments to report the figures on the basis of arithmetical calculation arrived at by dividing the wage
component of expenditure with the minimum wages rather than by actual count of the muster rolls.

z Insufficient or lack of evidence of reported employment generation in the absence of muster rolls, family cards
and inventory of assets casting a doubt on actual delivery of the programme.
CHAPTER III Page 6 of 26

z Insufficient resource allocation, which even at the level of full and faithful utilisation could provide significant
number of days of employment to secure any dent in rural unemployment / poverty.

z Actual average employment per person was 18 days and 16 days during 1994-95 and 1995-96 under EAS
against the promised assured employment of 100 days in one year.

z Widely prevailing errors in reporting of financial performance, large scale diversion and misuse of funds
provided for the programme.

z Ineffective control monitoring and review of the programme by the Ministry.

The implementation of the programmes during 1992-93 to 1998-99 was reviewed again by test check of documents in
the Ministry and in 148 districts of 25 states and 2 Union Territories during December 1998 - July 1999. The review
aims at examining whether the Ministry had taken effective measures to address the weaknesses highlighted in the
previous reviews and the effectiveness of the various components of programmes. Extent and adequacy of
employment provided to workers and evaluation of overall impact of the programmes on rural unemployment were
important audit objectives. Besides, progress made in identification of workers, issue of registration cards, creation of
assets, arrangements for maintenance and upkeep of these assets, effectiveness of monitoring were also examined.

[Link] The districts/blocks covered under review were as under:

Total no. of districts Per cent Total no. of blocks Per cent Total expenditure (Rs Per cent
coverage coverage in crore) coverage
Covered Test Covered Test Covered Test
under the checked under the checked. under the checked
programme programme programme
547 148 27 2590 511 20 33380.17 9436.10 28.27

State-wise details of samples selected for audit are at Annex 1.

All observations in this review are based on the macro analysis at the central and state levels and detailed
examination in the sample districts.

4.3.2 In addition, a beneficiary survey for rural employment programmes was commissioned by Audit with the primary
objective to assess the reach of the JRY and EAS programmes; the coverage of the targeted population and
verification of assets created under JRY and EAS as per the perception of the beneficiaries. The survey was carried
out by ORG-MARG during August - October 1999 in 141 districts, 296 blocks and 2106 villages covering a sample of
15106 EAS, 20454 JRY and 82788 potential beneficiaries. The survey was carried out using both quantitative (primary
survey using pre-tested beneficiary schedules) and qualitative (in-depth interview with programme functionaries)
techniques. The main findings and recommendations of the survey are at Annex 2 The specific findings of the
beneficiary survey are included under appropriate paragraphs dealing with those aspects.

4.4 Distortions in targeting

4.4.1 Absence of a system of registration for job seekers: Public Accounts Committee in its 94th report on NREP
in 1986-87 had recommended the evolution of a system of registering the workers after their identification and issuing
them identity cards cum pass books to record the number of mandays of employment generated, wages paid etc. This
was subsequently reiterated by the Estimates Committee in their report on JRY in April 1993. The Ministry was yet to
act upon these recommendations. Rather the Ministry had made the criteria for identification of workers too complex
by fixing different weightages for employment to be given to BPL, SC,ST and women workers. 22.5 per cent of the
annual allocation was to be spent on works, which directly benefit SCs/STs while 30 per cent of employment
opportunities were to be given to women workers which had made targeting cumbersome and therefore were not
achievable.
CHAPTER III Page 7 of 26

Guidelines on EAS also contained specific provisions for registration of workers seeking employment by village
panchayats within the blocks covered by EAS. Panchayats were to maintain the registers and report the number of
persons so registered, to the Block Development Officers who were to consolidate the details and report to the
implementing authority and issue family cards to them.

[Link] Registration of workers was not done under either of the schemes in West Bengal, Haryana, Karnataka,
Bihar, Himachal Pradesh, Jammu & Kashmir and Manipur. Registration was partial in Pondicherry. No record of
registration was maintained in Assam, Rajasthan and Jammu & Kashmir (Jammu Division). In seven talukas of four
districts of Gujarat no record of registerd persons was maintained. In other talukas where the registers were prepared,
audit could not verify whether the prescribed procedure of registration was followed.

[Link] Sample checks disclosed cases where payments were made to unregistered workers under EAS, which
included casual staff of Public Works Divisions.

Registeration of jobseekers and issue of family cards to them, a pre-requisite for watching extent of employment
provided to each worker was not done despite repeated recommendation of the PAC/Estimates Committee

[Link] Beneficiary survey also confirmed low per centage of registration of EAS workers. Less than one fourth of the
total EAS workers were reportedly registered. Except Union Territories like Pondicherry and Lakshadweep and
States like Arunachal Pradesh and Tripura, where registration was satisfactory, registration in other parts of the
country was found to be quite low. Low per centage of registration of EAS workers clearly indicated that payments
were made to the non-registered workers in violation of the programme guidelines.

4.4.2 Family cards

[Link] Family cards are an essential control to establish the employment to the rural poor. These were not issued to
majority of the registered persons. Sample check revealed that family cards were not issued or were issued partially to
the registered persons in Haryana, Meghalaya, Kachchh district of Gujarat, Himachal Pradesh, 10 Gram
Panchayats of Rajasthan, 14 Blocks of Manipur, Pondicherry, Madhya Pradesh (Bhopal district), 124 Gram
Panchayats of Karnataka, Andhra Pradesh, Bihar, Arunachal Pradesh, Punjab, Orissa, Uttar Pradesh and Tamil
Nadu. The state government of West Bengal reported 22.42 lakh registered persons to Government of India during
1995-96. In none of Gram Panchayats test checked family cards were shown to audit.

In Sikkim, the family cards were deficient, as they did not contain details of employment provided.

Thus, the correctness of the extent of provision of employment could not be ensured. This was also confirmed by the
beneficiary survey, which showed that among the respondents the family cards were issued to 14 per cent of the
beneficiaries and only 4 per cent possessed the family cards issued to them.

4.4.3 Employment of women

Employment provided to women workers was less than the prescribed norms

[Link] Guidelines of the JRY envisaged 30 per cent of the employment opportunities to be reserved for women.
Sample checks disclosed that in 4 blocks in Meghalaya, Haryana (three districts), five districts of Uttar Pradesh,
Punjab, Jammu & Kashmir, Arunachal Pradesh and Assam employment provided to women workers was
insignificant. In Nagaland employment to women workers was only 17.58 per cent and 13.47 per cent during 1997-98
and 1998-99. It ranged between 12 per cent and 25 per cent in Manipur and 0.07 and 26 per cent in seven
Panchayat Samities of West Bengal.

[Link] Beneficiary survey disclosed that proportion of women beneficiaries to the total beneficiaries was only 16 per
cent in both EAS and JRY. The survey also revealed significant variations across various States and Union Territories.
Under JRY, the proportion of female beneficiaries was less than three per cent in Assam, Bihar and Uttar Pradesh.
No evidence was found about any female beneficiary in Jammu & Kashmir. Under EAS the female representation
was less than five per cent in a number of states which included Punjab, Assam, Uttar Pradesh, Haryana and
Himachal Pradesh. In Nagaland, Mizoram and West Bengal the proportion of female beneficiaries was less than
CHAPTER III Page 8 of 26

ten per cent.

4.5 Financial performance under JRY and EAS (Annex 3 A & 3 B)

4.5.1 The release of funds and actual expenditure under JRY during 1992-99 and EAS since its launch in October
1993 to March 1999 was as under:

Table I (Rs. in crore)

Year JRY EAS Total (JRY + EAS)

Release Expenditure Release Expenditure Release Expend
Centre State Total Centre State Total
release release
1992- 2524.88 657.45 3182.34 2709.59 - - - - 3182.34 2709.59
93
1993- 3229.66 653.43 3883.09 3878.71 439.10 109.66 548.76 183.75 4431.85 4062.46
94
1994- 3497.53 873.14 4370.67 4268.33 1128.52 281.73 1410.25 1235.45 5780.92 5503.78
95
1995- 3686.59 920.48 4607.07 4466.91 1705.69 425.95 2131.64 1720.61 6738.71 6187.52
96
1996- 1639.10 409.28 2048.38 2163.98 1939.59 484.20 2423.79 2160.41 4472.17 4324.39
97
1997- 1941.07 484.72 2425.79 2439.38 1968.72 491.76 2460.48 2904.97 4886.27 5344.35
98
1998- 2050.96 495.57 2546.53 2428.31 1988.46 496.69 2485.15 2819.77 5031.68 5248.08
99
Total 18569.79 4494.08 23063.87 22355.21 9170.08 2289.99 11460.07 11024.96 34523.94 33380.1

Against the total release of Rs 34523.94 crore for both the schemes by the central and the state governments to the
DRDA's/ZPs, the state governments reported expenditure of Rs 33380.17 crore, which consisted of an expenditure of
Rs 22355.21 crore on JRY and Rs 11024.96 crore on EAS. It would be seen from the above table that the reported
utilisation of fund was 97 per cent of releases for JRY and 96 per cent for EAS.

The above data shows a very high level of utilization with the allocation. The following factors should be taken into
account to get a proper perspective.

a. The utilization is highly inflated as has been brought in subsequent paragraph here.

b. The amounts shown as utilised also include amounts kept in various deposits and hence not actually utilized. In
many cases utilization certificates have not been received.

c. The employment generation figures which is claimed to nearly equal the target are generated mechanically
without reference to the actual employment as gleaned from the muster rolls.

d. The resources allocated were much less than the total amount demanded by the Ministry of Rural Employment.
With the actual provision of resources, registered poor can be given employment only upto 16 days in a year
whereas the schemes provide for 100 days of employment to such persons.

These factors are analysed in detail in the following paragraphs.

CHAPTER III Page 9 of 26

4.5.2 Adequacy of allocation of resources:

Ab-initio the funds provided were too meagre to generate assured employment of 100 days to each registered
worker and thus the implementation had inbuilt constraints for success of the programmes

Viewed in the background of the target population which was intended to be provided with additional gainful
employment under JRY and assured employment of 100 days to two members of each family who seek employment
under the EAS, the actual release of fund by the Ministry for both the programmes would suggest an extremely thin
spread of the resources for providing adequate employment even to the registered workers under EAS only. The
programmes, thus, had inbuilt constraints of fund for providing assured 100 days of employment due to covering of all
the areas instead of adopting area specific approach in targeting the most needy areas. The releases towards wage
component made by the Ministry could provide employment to not more than 15 mandays to BPL persons under JRY
and not more than 16 mandays to employment seekers under EAS, even if the programmes were implemented in the
most ideal manner in which the entire fund was truthfully utilised for provision of the employment. The maximum
mandays of employment that could be generated with the total amount of releases towards wage components were as
under:

JRY

Year Targeted BPL Total amount 60 per cent of Average Total number of Average per
families to be released by the the total minimum days for which person manday
provided central and amount wage per employment of employment
employment state released, being person per could be that could have
(Number in government the wage day (in Rs) generated (in been generated
lakh) (Rs in crore) component (Rs lakh) (in days)
in crore)
1992- 463.76 3182.34 1909.40 25 7637.60 16.47
93
1993- 488.06 3883.09 2329.85 25 9319.40 19.09
94
1994- 488.06 4370.67 2622.40 25 10489.60 21.49
95
1995- 488.06 4607.07 2764.24 25 11056.96 22.65
96
1996- 488.06 2048.38 1229.03 25 4916.12 10.07
97
1997- 488.06 2425.79 1455.49 35 4158.48 8.52
98
1998- 488.06 2546.53 1527.92 35 4365.49 8.95
99
Total 3392.12 23063.87 13838.31 51943.65 15.31

EAS

Year Total registered Total amount 60 per cent of Average Total number Average per
workers to be released by the the total minimum of days for person manday
provided central and amount wage per which of employment
employment state released, being person per employment that could have
(Total number of government the wage day (in Rs) could be been generated
workers (Rs in crore) component (Rs generated (in (in days)
registered under in crore) lakh)
CHAPTER III Page 10 of 26

EAS) (number in
lakh)
1992- -
93
1993- -
94
1994- 150 1410.25 846.15 25 3384.60 22.56
95
1995- 201 2131.64 1278.98 25 5115.92 25.45
96
1996- 263 2423.79 1454.27 25 5817.08 22.11
97
1997- 419 2460.48 1476.29 35 4217.97 10.06
98
1998- 430 2485.15 1491.09 35 4260.26 9.90
99
Total 1463 10911.31 6546.78 22795.83 15.58

4.5.3 Audit of execution of the programmes disclosed that whatever was provided for by the Ministry and the state
governments did not reach the actual beneficiaries due to several aberrations in its implementation by the DRDAs/ Zila
Parishads and absence of effective internal oversight by the Ministry and state governments. The efficacy of the
programme within the limited resource depended preponderantly on the quality of expenditure incurred. There were
many irregularities which affected efficient implementation of these programmes to secure the employment to the
target population.

4.5.4 Of the total expenditure of Rs 33380.17 crore spent under JRY and EAS during 1992-99, the sample selected by
the Audit for detail examination covered about Rs 9436.10 crore. Scrutiny revealed as follows:

4.5.5 Inflated reporting of expenditure (Annex -4)

Records in the States revealed that expenditure on JRY and EAS were reported in excess of actual expenditure by Rs
160.47 crore in 12 states.

4.5.6 Failure to release central/state share to implementing/executing agencies (Annex-5)

State share and releases by the Union Government under JRY through state government until March 1999
aggregating Rs 236.14 crore were short released by the central/state governments to the implementing/executing
agencies in Rajasthan (Rs 14.36 crore), Manipur (Rs 12.36 crore), West Bengal (Rs 6.18 crore), Himachal Pradesh
(Rs 0.61 crore), Punjab (Rs 2.10 crore), Jammu & Kashmir (Rs 1.93 crore), Madhya Pradesh (Rs 82.76 crore),
Bihar (Rs 88.00 crore) and Assam (Rs 27.84 crore). To the extent these amount could generate employment, the
rural poor was deprived of the employment opportunities.

4.5.7 Delay in release of fund to the executing agencies (Annex- 6)

Physical progress was affected due to delay in release of fund

In Madhya Pradesh, Assam, Meghalaya, Gujarat, Arunachal Pradesh, Jammu & Kashmir, Dadra & Nagar
Haveli, Himachal Pradesh, Haryana, Orissa, Rajasthan, Tamil Nadu, Manipur, Uttar Pradesh, Sikkim, Nagaland,
Karnataka, Goa, Kerala, and West Bengal, state governments/DRDAs/Zila Parishad released Rs 2777.46 crore to
the implementing agencies with a delay of upto 36 months. Delayed release of fund and release at the fag end of the
year adversely affected the planning and execution process.
CHAPTER III Page 11 of 26

4.5.8 Diversion of fund (Annex - 7 A & 7 B)

Financial achievement reported by state governments contained error of Rs 2178.07 crore

Sample check disclosed diversion of Rs 2178.07 crore during 1992-99 to activities not connected with the
programmes and parking of the fund in Personal Ledger Accounts, Personal Deposits, fixed and term deposits, etc.
Significant diversions of fund noticed in audit were as under:

[Link] Deposits of fund (Annex -7 B)

Rs.1747.52 crore was parked in personal ledger accounts, personal deposit accounts, fixed deposits or term deposits,
civil deposits and revenue deposits, etc. as under which affected generation of employment adversely.

Three state governments kept Rs 905.11 crore in Personal Deposit Account

Sr. Parking of fund in States Amount

No. (Rs in
crore)
1. Personal Ledger Account Gujarat, Punjab, Orissa, Andhra Pradesh, Tripura and Uttar 238.51
Pradesh
2. Personal Deposit Account Andhra Pradesh, Rajasthan, and Karnataka 905.11
3. Fixed Deposits/Term Andhra Pradesh, Madhya Pradesh, Karnataka, Pondichery, 138.64
Deposit/Deposit at Call/ Arunachal Pradesh, Meghalaya, Gujarat, Tamil Nadu, Uttar
Bank Account Pradesh, Mizoram, Sikkim, Assam, Himachal Pradesh and
Nagaland
4. Civil Deposits Bihar, Madhya Pradesh Karnataka and Manipur 345.94
5. Revenue Deposits Assam 41.87
6. Other State Receipts Bihar, Madhya Pradesh, West Bengal, Kerala, Karnataka and 77.45
Punjab
Total 1747.52

[Link] Diversion to activities not connected with programmes (Annex 7 A)

State governments spent Rs 251.81 crore on construction activities not covered under guidelines of the scheme

In Andhra Pradesh, Mizoram, Jammu & Kashmir, Assam, Meghalaya, Punjab, Madhya Pradesh, Haryana,
Himachal Pradesh, Arunachal Pradesh, Orissa, Manipur, Uttar Pradesh, Rajasthan, Tamil Nadu, Kerala,
Karnataka, Maharashtra, West Bengal and Tripura, Rs 251.81 crore were spent on construction of office building,
volley ball court, high school, mandir, hospitals, electrification, college building, mini-stadium, etc. which were not
covered under the quidelines on items of works that could be taken up under the shceme.

Rs 15.19 crore were spent on purchase of colour TV set, geyser, refrigerator, furniture, dinner set, photocopiers, air-
conditioned car and jeep, payment of pay and allowances, travelling allowances of regular staff of DRDA, etc. in
Jammu & Kashmir, Meghalaya, Arunachal Pradesh, Punjab, Tamil Nadu, Pondicherry, Uttar Pradesh, Haryana,
Assam, Bihar, Nagaland, Andhra Pradesh, Karnataka and West Bengal

In Karnataka, Goa, Rajasthan, Uttar Pradesh, Pondicherry, Tamil Nadu, Andhra Pradesh, Nagaland, Gujarat,
Himachal Pradesh, Mizoram, Madhya Pradesh, Punjab, Orissa, West Bengal, Assam and Bihar, Rs 123.57 crore
were diverted to other schemes viz MPLADS (Member of Parliament Local Areas Development Scheme.), IRDP
(Integrated Rural Development Programme), DWCRA (Development of Women and Children in Rural Areas), DPAP
(Drought Prone Area Programme), TRYSEM (Training of Rural Youth for Self Employment) and state schemes, urban
CHAPTER III Page 12 of 26

areas, etc.

4.5.9 Money lying unutilised / advances unadjusted treated as final expenditure (Annex - 8)

Rs 754 crore lying unutilised/ unadjusted were treated as final expenditure though actually not spent

In 22 states, money lying unutilised / advances unadjusted, amounting to Rs 754 crore given to executing agencies
and officers of DRDAs, etc. were treated as final expenditure though there was no evidence that this was actually fully
spent, as utilisation certificates were not received. More important of such amounts lying unadjusted related to
Assam: Rs 4.87 crore; Tamil Nadu: Rs 29.85 crore; Madhya Pradesh: Rs 4.77 crore; Orissa: Rs 40.24 crore; Uttar
Pradesh Rs 311.08 crore; Tripura: Rs 47.40 crore and Andhra Pradesh: 70.54 crore.

4.5.10 Administrative expenditure in excess of provisions.

State governments spent Rs 14.50 crore in excess of prescribed ceiling on administrative expenses

Guidelines under the programmes contemplated expenditure of maximum two per cent of fund utilised in a year on the
administration and contingencies. Rs 14.50 crore were, however, spent in excess of the prescribed ceiling in Assam
(P&RD: Rs 5.88 crore), Gujarat (3DRDAs: Rs 0.36 crore), Himachal Pradesh (Rs 0.83 crore), Arunachal Pradesh
(Rs 2.62 crore), Rajasthan (DRDA, Sikar : Rs 0.18 crore), Sikkim (Rs 0.28 crore), Goa (Rs 0.74 crore), Karanataka
(Rs 0.30 crore in three districts), Orissa (DRDA, Jharsuguda : Rs 0.14 crore), West Bengal (ZPs, Bhirbhum and
Jalpaiguri : Rs 2.10 crore) Meghalaya (Rs 0.02 crore), Mizoram (Rs 0.09 crore), Pondicherry (Rs 0.91 crore) and
Andhra Pradesh (Rs 0.05 crore) between 1992-93 and 1998-99.

4.5.11 Suspected misappropriation of fund/fictitious payments.

Deficient control led to suspected misappropriation of funds/ ficticious payment of Rs 9.52 crore in 10 states

In Gujarat, Punjab, Manipur, Karnataka (Rs 1.14 crore), Tamil Nadu, Bihar, Assam, Andhra Pradesh (Rs 2.28
crore), Nagaland (Rs 3.50 crore)and Uttar Pradesh suspected misappropriation of fund and fictitious payments
amounting to Rs 9.52 crore were as detailed in Annex- 9:

4.5.12 Rush of expenditure

In nine states Rs 1182.27 crore were spent in the last quarter of which Rs 910.31 crore were spent in the month of
March. The expenditure in last quarter/March constituted 38.39 per cent and 29.55 per cent of the total expenditure of
Rs 3079.58 crore by the agencies included in the Annex 10. In Karnataka, out of Rs 984.53 crore spent during 1995-
98 for the entire state, Rs 261.02 crore constituting 27 per cent was spent in March. Rush of expenditure at the fag
end of the year is not consistent with five programmes. The demand for employment generation is generally uniform
throughout the year or is more concentrated in the lean season, if and when it exists.

4.5.13 Execution without sanction (Annex - 11)

Rs 95.41 crore were spent in execution of works without sanction of the competent authority not included in the
annual action plans

Sample check of records disclosed that implementing agencies executed works valued at Rs 95.41 crore without
obtaining the administrative approval/ technical sanction from the competent authority and/or on works which were not
included in the annual action plans of the respective DRDAs during 1992-99. Some of the more important cases
related to Gujarat (Rs 3.32 crore), Arunachal Pradesh (Rs 22.91 crore), Haryana (Rs 2.15 crore), Jammu &
Kashmir (Rs 1.16 crore), Orissa (Rs 1.08 crore), Maharashtra (Rs 3.15 crore), Rajasthan (Rs one crore), Mizoram
(Rs 1.41 crore), Karnataka (Rs 8.80 crore), Bihar (Rs 0.85 crore), Pondicherry (Rs 0.34 crore) and West Bengal
(Rs 48.50 crore).

4.6 Employment generation

CHAPTER III Page 13 of 26

4.6.1 The programme of rural employment envisaged providing employment on a sustainable basis. EAS was a
demand-driven scheme where 100 days of employment per worker was assured while under JRY adequate
employment was to be provided for BPL workers.

The reported figures on employment generation were not genuine as most of the states reported figures derived
mechanically

4.6.2 As brought out in paragraph 5.2, the ministry ab-initio did not provide adequate resources to make any serious
dent on the rural un-employment and thereby on the rural poverty. A budget provision, which could provide
employment on an average of not more than 15 days under JRY and 16 days under EAS, could not be expected to
address the problem of rural un-employment.

The average number of days of employment provided to each BPL worker/ employment seeker was insignificant and
ranged only between 7 and 21 days under JRY and 9 and 18 days under EAS

4.6.3 Further, according to the Ministry, against 244 million BPL persons, only 43 million people had been registered
under EAS as of March 1999. Ministry's estimates at an aggregate level, thus, pointed to limited employment
generated under JRY and EAS. According to records of the Ministry, the average per person mandays of employment
generated had ranged between 7-21 mandays under JRY and 9-18 mandays under EAS per worker during 1992-99.

Average mandays of employment generated against target under JRY and the registered persons under EAS during
1992-99 was as under:

JRY EAS
Year *No. of BPL BPL Target (in Actual Average Registered Target Actual Average
people as families lakh mandays mandays of persons at 100 mandays manday
per (BPL mandays) generated employment (in lakh) days generated employm
assessment families (in lakh) provided per (in lakh) provide
of Expert calculated (No of days) person a registe
Group of from BPL worker (
Planning population of days)
Commission taking 5
(in lakh) persons
per
family.) (in
lakh)
1992- 2318.79 463.76 7537.95 7821 16.86 - - - -
93
1993- 2440.31 488.06 10383.26 10258 21.01 N.A - 494.74 -
94
1994- 2440.31 488.06 9865.45 9517 19.50 150 15000 2740 18.27
95
1995- 2440.31 488.06 8480.05 8958 18.35 201 20100 3465 17.23
96
1996- 2440.31 488.06 4141.37 4006 8.21 263 26300 4030 15.32
97
1997- 2440.31 488.06 3864.90 3949 8.09 419 41900 4685 11.18
98
1998- 2440.31 488.06 3966.57 3305 6.77 430 43000 3927 9.13
99
Total
CHAPTER III Page 14 of 26

Source: 1. Compilation of Data on JRY, EAS, MWS and IAY - 1995-96 Ministry of Rural Areas and Employment.
2. Data furnished by the Ministry for 1996-97 onwards.

* The BPL persons had increased from 232 million persons in 1987-88 to 244 million persons in 1993-94 and to 350
million in 1996.

4.6.4 Dismal rate of per person mandays of employment generated

Sample checks in the individual implementing agencies revealed that against assured generation of 100 man-days of
employment per person under EAS, the average generation between 1993-94 and 1998-99, on the basis of total man-
days reportedly generated divided by the number of registered persons, ranged between nil and 73 in two districts of
Gujarat, 7 and 38 in Karnataka, 12 and 33 in Dadra and Nagar Haveli, 8 and 40 in Arunachal Pradesh, 7 and 84 in
Maharastra 5 and 30 in Madhya Pradesh, 6 and 80 in Orissa, 50 and 65 in Assam, 8 and 71 in Uttar Pradesh, 1
and 2 in Bihar, 9 and 24 in Kerala, nil and 35 in Himachal Pradesh and 10 and 17 in Punjab.

[Link] Even under JRY, which aimed at creation of additional gainful employment for the BPL population, mandays of
employment provided per person was negligible. Sample checks of records in states revealed that generation of
mandays of employment, ranged between 2 and 27 in Tripura, Tamil Nadu, Madhya Pradesh, Orissa, Punjab,
Manipur and Bihar

4.6.5 Mechanical determination of employment generated (Annex 12A and 12B)

Deficient reporting of employment generation by DRDAs/ZPs and state governments by mechanically calculating the
wage component by minimum wage rate

The system of reporting employment generation was unsatisfactory. The number of mandays of employment
generated was inflated by 54.09 lakh by computation on notional basis by dividing the total expenditure on wage
components by the prescribed minimum wage rate in Assam, Manipur, Rajasthan, Uttar Pradesh, Punjab, Tamil
Nadu, Jammu & Kashmir, Tripura, Mizoram, Nagaland, Himachal Pradesh, Sikkim, Kerala, Maharashtra,
Orissa, Arunachal Pradesh and Madhya Pradesh. Further in Karnataka, Haryana, Kerala, Manipur, Himachal
Pradesh, Uttar Pradesh, Punjab, Andhra Pradesh, Bihar, Nagaland and West Bengal 24.04 crore mandays of
employment generated were shown inflated due to incorrect reporting of figures of employment against those as per
muster rolls or those furnished by executing agencies. Government of Bihar reported 22.27 crore days of employment
generations more than the maximum that could be generated even with full utilisation of wage component of the
expenditure. In Tripura no compiled and consolidated database or number of mandays actually generated was
available at any level, hence reported figures of 3.47 crore mandays generated and number of beneficiaries was not
genuine.

4.6.6 The beneficiary survey also underlined the grossly inadequate per centage of per person employment days
provided. According to the survey, under JRY and EAS, employment generated per person was only 21 and 27 man-
days respectively.

4.7 Improper maintenance of muster rolls (Annex - 13)

JRY and EAS were fundamentally wage employment programmes and it was important to maintain muster rolls
properly, wherein particulars of workers engaged in the works were required to be noted. The guidelines envisaged
compilation of figures of employment generation on the basis of certificates of muster rolls.

Public Accounts Committee had also emphasised this aspect in its report for watching employment generation to the
registered workers.

Muster-rolls, the authentic record of employment generation were either not maintained or maintained in imperfect
manner in 18 states

Muster rolls were not maintained or were kept in an imperfect manner or were manipulated in Bihar, Sikkim, West
Bengal, Tripura, Tamil Nadu, Uttar Pradesh, Kerala, Andhra Pradesh, Rajasthan, Jammu & Kashmir, Punjab,
CHAPTER III Page 15 of 26

Orissa, Gujarat, Haryana, Goa, Maharashtra, Assam and Nagaland. In some of them, payments were made
without measurement of the work.

In Goa, Rs 10.58 crore were paid without measurement of work done while in West Bengal and Orissa Rs 2.06 crore
and Rs 3.11 crore respectively were paid on unattested thumb impression/ without evidence of verification of persons.

In Jammu & Kashmir, the muster-rolls indicated payments made on non-existent dates

In Jammu & Kashmir, the muster rolls indicated payments made on 31 September 1995, 29 February 1997, 31 April
1997, 31 June 1997, 29 February 1999 in eight cases ; at one each of Bhalwal, Dansal and Chenani blocks, two of
Srinagar block and three of Pampore block.

In Tamil Nadu, the state government abolished maintenance of muster rolls for JRY in September 1990 and instead
provided for maintenance of the attendance register only. Some muster rolls were charged to particular items of
works, thus abolition deprived the link between the employment and the specific work on which the persons were
employed.

The beneficiary survey also brought out that the muster rolls were not available in many of the Panchayats. Even in
some cases where the Panchayats made muster rolls available, many names were found to be false. The trend was
found to be identical across all the states. In Karnataka and Jammu & Kashmir all the names in muster rolls of the
sample villages were false. Despite the fact that all the beneficiaries were required to put their signatures or thumb
impressions on the muster rolls at the time of receiving payment, only half of the total respondents reported to have
either put their signatures or thumb impression on the muster rolls while receiving payment. The survey report brought
out that nearly half of the payments were made without the beneficiary's acknowledgement of the receipt lending
scope to manipulation of records. States where majority of beneficiaries did not sign on the muster rolls were Andhra
Pradesh (98%), Tamil Nadu (85%), Kerala (79%), Jammu & Kashmir (66%), Bihar (60%), Mizoram (88%),
Meghalaya (83%), Manipur (83%), Assam (62%) and Orissa (69%). According to the survey, further under EAS,
nearly half of the beneficiaries reportedly did not sign on the muster rolls and nearly 2/3rd of beneficiaries in Bihar
reportedly did not sign on the muster rolls at the time of receiving payments.

4.8 Wage related issues

The guidelines contemplated that of all the expenditure incurred on various works, 60 per cent was to be incurred on
the wages of unskilled workers. In case of need for supplementary requirement of fund for material component, it was
to be provided by dovetailing resources from state government plan/non-plan/sectoral programme fund.

4.8.1 Non-adherence to ratio between expenditure on wage and non-wage components (Annex 14)

State governments did not adhere to ratio between expenditure on wage and material components

Test check revealed that minimum ratio between expenditure on wage and material components was not observed in
Punjab, Madhya Pradesh, West Bengal, Gujarat, Meghalaya, Haryana, Arunachal Pradesh, Tamil Nadu,
Nagaland, Tripura, Karnataka, Jammu & Kashmir, Orissa, Rajasthan, Manipur, Pondicherry, Uttar Pradesh,
Sikkim, Goa, Kerala, Himachal Pradesh, Mizoram, Dadra & Nagar Haveli and Andhra Pradesh. The per centage
of expenditure on wages was very low and ranged between 3 in Orissa and 59 in Bilaspur district of Madhya
Pradesh. In 16 states/UTs there was excess expenditure of Rs 95.15 crore on non-wage component. Since the
programmes were basically for wage employment and a ceiling of 40 per cent on the expenditure that could be met on
material was prescribed to maximise the employment generation, the excess expenditure on the material by the state
governments was un-authorised and reflected poorly on their sensitivity about the rural poor. As a consequence,
generation of man-days of employment also fell short. At a minimum wage rate of Rs 35 per man-day, the extent of
shortfall in generation of employment would work out to 2.72 crore man-days.

4.8.2 Payment of wages

Rates of wages to be paid under the programmes were to be minimum agricultural wages for the unskilled labourers
as notified by the concerned state government and were to be the same for men and women workers. Wages were to
be paid weekly at the work-site in the presence of local persons like ‘Sarpanchs'', 'Panch’ and Block Committee
CHAPTER III Page 16 of 26

members, etc. Test check of records in the states disclosed following shortcomings in wage payment.

[Link] Delay in payment of wages (Annex 15)

There was delay in payment of wages in 16 states

In Gujarat, Pondicherry, Assam, Maharashtra, Uttar Pradesh, Andhra Pradesh, West Bengal, Himachal
Pradesh, Arunachal Pradesh, Haryana, Rajasthan, Goa, Karnataka, Nagaland, Tamil Nadu and Orissa there
were delays in payment of wages between one and 38 months in some cases due to late receipt of fund rendering the
workers without wages. Beneficiary survey also showed that nearly 21 per cent of the beneficiaries were paid on
completion of the projects, contrary to payment of wages every week.

[Link] Short / non-payment of wages (Annex 16)

The implementing/executing officers of DRDA/Panchayats/line department in Haryana, Goa, Orissa, Uttar Pradesh,
Madhya Pradesh, Tamil Nadu, West Bengal, Assam, and Bihar under-paid the wages of Rs 43.90 crore to the
workers reportedly due to payment of wages at lower rates than the prescribed minimum wage rate.

[Link] Other shortcomings

Payment of wages at lower rates than prescribed led to underpayment of Rs 43.90 crore to workers in nine states

Payment of wages was not made in the presence of ‘Sarpanch’ ‘Panch’ Block Committee members, etc., in
Arunachal Pradesh (3 Block - Rs 10.53 lakh), Haryana (2 districts - 1.86 crore), Orissa (52 executing agencies - Rs
3.11 crore), Assam (six districts - Rs 1.62 crore) and Madhya Pradesh between 1992-93 and 1998-99. In Sikkim, no
records of payment of wages in the presence of local persons were available. Thus, an important tool of assurance of
wage payment was foiled by the state governments.

Beneficiary survey also disclosed that one tenth of beneficiaries under JRY and two fifth under EAS were paid at
home.

State governments of Gujarat (4 districts), Manipur (BDO, Moreh block, Chandel district) and Andhra Pradesh paid
Rs 32.71 lakh as wages through gangmen, Jamadars, MLAs and President of Village Development Committee
instead of directly to the workers.

Beneficiary survey revealed that nearly 1/3 rd of total beneficiaries reported having been paid by the contractors.

BDO, Dirang in Bomdila district of Arunachal Pradesh reportedly paid Rs 99.76 lakh towards wages during January
1996 to December 1998 without recording the payments in cash book. Bills for payment of wages could not be located
for verification in Audit.

4.9 Assets creation

The guidelines contemplated prioritization of activities under the programmes for creation of rural economic
infrastructure and community assets for sustaining employment in the following proportions.

State governments did not follow prescribed sectoral priorities. There was pre -ponderence on construction of
kachcha roads and buildings

Sectors EAS JRY

Economically productive assets: Water and soil conservation measures, land protection, 40 per cent 60 per
vegetative barriers, agro-horticulture, afforestation, silvi -pasture, etc. under watershed 20 per cent cent
development, Minor irrigation works and Link roads featuring in the master plans of the 20 per cent
respective districts
CHAPTER III Page 17 of 26

Individual beneficiaries projects for SCs/STs - 22.5

per
cent
Works including roads and buildings/Public Community buildings 20 per cent 17.5
per
cent

Sample-check of records in the states revealed non-adherence of prescribed sectoral weightage, the highest priority to
construction of 'kachcha' rural link roads and low priority to work of soil and moisture conservation, etc.

Prescribed sectoral earmarking of fund was not followed in Uttar Pradesh, Andhra Pradesh, Punjab, Maharashtra
(Thane district), Sikkim, Goa, Jammu & Kashmir, Kerala, Tripura, Tamil Nadu, Karnataka, Gujarat, Haryana,
Arunachal Pradesh, Mizoram, Madhya Pradesh, Rajasthan, Dadra & Nagar Haveli, Nagaland and Bihar.

Construction of 'kachcha' rural roads and buildings was given the highest priority in Uttar Pradesh, Sikkim, Goa,
Tripura, Tamil Nadu, Andhra Pradesh, Karnataka, Gujarat, Haryana, Arunachal Pradesh, Dadra & Nagar Haveli,
Mizoram, Madhya Pradesh, Rajasthan, Punjab, Nagaland and Bihar where expenditure on roads and buildings
was very high and which ranged between 22 and 99 per cent under the programmes.

Beneficiary survey also disclosed that proportion of link roads and civil construction such as school building,
panchayat ghar, community building, etc. was much higher compared to other assets created during 1996-99.

In seventeen states, lowest priority was given on taking up works of soil and water conservation, watershed
development, etc. which have a direct and continuing benefits to the poor

In Sikkim, Goa, Jammu & Kashmir, Kerala, Tripura, Karnataka, Tamil Nadu, Gujarat (two districts), Haryana,
Mizoram, Madhya Pradesh, Dadra & Nagar Haveli, Rajasthan, Arunachal Pradesh, Andhra Pradesh, Nagaland
and Bihar lowest priority was given to taking up of economically productive assets viz watershed development/water
and soil conservation works, social forestry, etc.

In Sikkim, Tripura, Uttar Pradesh, Mizoram, Nagaland and Bihar only 4 per cent to 17 per cent of expenditure was
incurred on minor irrigation works against 20 per cent prescribed under guidelines, while some other states viz Goa,
Kerala, Tamil Nadu and Gujarat, the expenditure on minor irrigation was upto 53 per cent.

In Andhra Pradesh, Sikkim, Goa and Jammu & Kashmir no specific scheme/work benefiting the SC/ST were taken
up under EAS though under the guidelines expenditure of 22.5 per cent of total expenditure was to be incurred on
such schemes while in Uttar Pradesh, Kerala, Karnataka, Haryana and Madhya Pradesh, the works taken up were
less than the prescribed weightage. This deprived the benefits to SCs/STs of economic assets under the programmes.

This pattern has to be seen against the observation of the Estimates Committee (Estimates Committee on JRY, 30th
Report, April 1993) that there was no explicit prioritization of assets being created under the programme. The
Committee had recommended that without interfering with the freedom of Panchayats, the asset creation plan should
be dovetailed into an overall plan of development of the region with first priority for productive and labour intensive
works viz. irrigation, water and soil conservation and reclamation of wastelands.

4.10 Failure to prepare shelf of projects/Annual Action Plan

The guidelines of the programmes enjoined upon the implementing authority to prepare Annual Action Plan/shelf of
projects proposed to be taken up in the district in the current and succeeding years after detailed survey of local
resources and felt needs of the people. Gram Sabha was to ratify every project executed under the programme. The
works included in the shelf of projects/Annual Action Plans were to be such which would normally be completed within
two years.

Shelves of project were not prepared or were deficient and works were executed in a lackadaisical manner
CHAPTER III Page 18 of 26

Shelf of projects were, however, not prepared or prepared without ascertaining local resources and their economic
viability, expected number of mandays of employment to be generated, etc. in Kerala (Palakkad district), Tripura,
Nagaland, Madhya Pradesh (Bilaspur district), Sikkim, Haryana (Sirsa district), Meghalaya, Himachal Pradesh,
Mizoram, Punjab, Orissa, Rajasthan, Manipur, Uttar Pradesh, Assam (six districts) and Andhra Pradesh. This led
to execution of works without sanction in many states as brought out in paragraph 4.5.13.

Annual Action Plans/ integrated plans were not prepared in eleven states

Annual Action Plan/Perspective/Integrated plans were also not prepared/approved in Andhra Pradesh (Cuddapah),
Assam, Nagaland, Meghalaya, Mizoram, Orissa, Rajasthan, Manipur, Goa, Punjab and Kerala, (4 Panchayats)

In Madhya Pradesh (Bilaspur district), Jammu & Kashmir, Assam, West Bengal and Kerala, Annual Action Plans
were prepared with delay of one to eight months/without considering details of location of works, employment likely to
be generated and without identifying the basic needs of each area, etc. In Sikkim and Manipur no survey of districts-
wise resources for selection of economically viable projects/works was done. This led to unplanned activities, which
did not have any direct effect on the overall area development and consequential generation of employment on a
sustainable basis. Ministry and state governments continued to release fund to the executing agencies without
ensuring preparation of shelf of projects/Annual Action Plans.

The beneficiary survey brought out that only a little over one fourth of the beneficiaries participated in Gram Sabhas for
identification and selection of projects under JRY and EAS. Participation in Gram Sabhas for identifying the projects
under EAS was high in Gujarat, Daman & Diu, Haryana, Himachal Pradesh, Rajasthan, Sikkim, Mizoram,
Meghalaya, Manipur and Nagaland. In West Bengal, participation was 40 per cent. Participation in Gram Sabhas
was very low in southern region. Similarly, under JRY, the participation was quite high in Himachal Pradesh, Haryana
and Nagaland while it was the lowest in Andhra Pradesh:

4.11 Appointment of contractors (Annex 17)

Works for Rs 420.90 crore were executed through contractors depriving employment to local workers

Under the programmes works were to be got executed departmentally employing local labour so that full benefits of
wages to be paid reached the local workers and fund was not wasted on contractors or middlemen margins. It was,
however, observed during test-check of records that works costing Rs 420.90 crore were got executed through
contractors in Andhra Pradesh, Assam, Himachal Pradesh, Meghalaya, Pondicherry, Punjab, Orissa, Rajasthan,
Sikkim, Karnataka, Maharashtra, West Bengal, Kerala, Haryana, Jammu & Kashmir, Gujarat, Tamil Nadu,
Madhya Pradesh and Uttar Pradesh. Execution of works through contractors resulted in payment of at least Rs
38.26 crore towards contractors' margin of 10 per cent of the cost of works. This deprived the employment generation
of at least 1.09 crore mandays which could have been generated out of the margin provided to the contractors taking
average wage rate of Rs 35 per day.

Major instances of execution of works through contractors were noticed in Andhra Pradesh: Rs 20.85 crore, Jammu
& Kashmir: Rs 319.10 crore, Karnataka: Rs 8.92 crore, Maharashtra: Rs 17.70 crore, and West Bengal: Rs 5.19
crore.

Beneficiary survey also highlighted the high influence and involvement of labour contractors with the beneficiaries.
Labour contractors not only executed projects, they were also found to be instrumental in identification of projects to
be executed, helping beneficiaries getting them registered, and providing labour for the execution of projects. It is
evident from the fact that nearly 30 per cent of beneficiaries worked under labour contractors, about 28 per cent
reported that labour contractors identified the projects, nearly two fifth reported that the labour contractors arranged for
labour and about five per cent took help of middlemen to get registered. Influence of contractors/ middlemen was
found to be relatively high in Tamil Nadu, Gujarat, Jammu & Kashmir, Uttar Pradesh, Bihar, Orissa and Assam.

4.12 Irregularities in execution of works

4.12.1 Social Forestry: Social forestry and agri-horticulture works were to be implemented to ensure that its benefits
accrue to the rural communities and particularly to the rural poor. These works were to include soil and water
CHAPTER III Page 19 of 26

conservation measures to ensure the healthy growth and survival of plants. Cost of maintenance of plantation on
community lands upto the period of three years of plantations was to be met from the programmes fund. Records in
states disclosed irregularities like low survival rate of plantations, non-handing over of plantations for maintenance,
non-provision of financial assistance for maintenance, planting of eucalyptus tree, etc. suggesting lackadaisical
execution of the component.

Orissa: Horticulturist and ASCO, Bhawanipatna and ASCO, Nowrangpur failed to provide evidence in support of
reported transfer of 'ber' and mixed plantations raised at Rs 1.46 crore to the SC/ST and poor beneficiaries.

In Bhawanipatna, the Horticulturist handed over 22000 plantations ('Ber' and cashew plants) raised at Rs 13.98 lakh to
private beneficiaries in July 1998. However, Project Director, DRDA on inspection found only 100-150 plants against
22000 plants handed over and ordered for stringent action against the person responsible. No record of action taken
was furnished to audit.

The ASCO, Bhawanipatna raised different plantations on 189 hectare in four blocks at Rs 25.41 lakh during 1994-96.
During verification, DRDA found that the survival rate of plantations was 5 per cent to 60 per cent.

DRDA, Bhawanipatna in Kalahandi district released Rs 84.06 lakh during 1995-97 to Horticulturist, Bhawanipatna for
raising 'Ber' and mixed fruit plantations in 324 hectare at the rate of Rs 15000 per hectare against the prescribed rate
of Rs 3000-4000 per hectare, resulting in excess payment of Rs 35.46 lakh from EAS fund.

Five executing agencies in Phulbani, Bhawanipatna and Koraput reportedly distributed seedlings raised at Rs 79.25
lakh during 1994-99, free of cost to the beneficiaries. The actual plantation of the seedlings and their further
maintenance was not assured.

Madhya Pradesh: The ADH, Mandla reportedly distributed mango plants costing Rs 6.17 lakh during September
1996 - February 1997 to Garden Superintendent and purchased 58505 mango plants at Rs 9.07 lakh in October-
December, 1996 from two nurseries at Lucknow and West Bengal without the sanction of CEO, Mandla. The plants
were reportedly distributed to beneficiaries after plantation season was over.

Assam: Three DRDAs, supplied seeds worth Rs 71.58 lakh in November 1998 free of cost to small and marginal
farmers

Rs 1.09 crore were released to executing agencies not nominated as Project Implementing Agencies

Maharashtra: DRDA, Akola released Rs 1.09 crore to 19 different executing agencies, not nominated as Project
Implementing Agencies, for execution of works in watershed areas. Details of utilisation of fund were not available.
The amount is held as objected by Audit.

The expenditure of Rs 5.55 crore on afforestation and agri-horticulture was unverifiable as records of plantation
were not maintained

Nagaland: Under EAS, Rs 5.55 crore was spent in afforestation and agri-horticulture in three districts during 1996-99.
However, none of the Blocks in the three districts had information and records relating to area of plantation, basis of
plant species selection, number of trees actually planted, sources of procurement of seedlings and plants, etc. Thus,
the correctness of the expenditure could not be verified in audit.

[Link] Low-survival rate of plantation

The survival rate of plantation / horticulture crops planted at Rs.1.28 crore was negligible in Assam (Karbi Anglong)
and 50 per cent in Bihar (DFO, Adityapur) and Haryana (Bhiwani).

4.12.2 Land management works

Land management works including soil and moisture conservation was one of the essential inputs for improving the
productivity of land and increasing agricultural production. Land development works included land shaping,
construction of drainage, field channels, providing vegetative hedges, boundaries, etc. The works taken up were to be
CHAPTER III Page 20 of 26

such, which could create durable productive community assets at least covering land of a group of ten farmers.
Following shortcomings were noticed in land development works.

Scrutiny of records in states disclosed that either land management works were not undertaken or lower priority was
assigned to such works. Also, the minimum requirement of benefit flowing to a group of at least 10 farmers was not
given due consideration. Some significant cases are briefly discussed in the following paragraphs.

In 10 implementing offices in Bangalore (Rural), Dharwar, Raichur and Tumkur districts of Karnataka 294 water
harvesting structures were constructed at Rs 1.24 crore even though the beneficiary farmers were less than the
prescribed minimum number of farmers against each work. About six implementing offices in the same districts
executed 23 works costing Rs 7.02 lakh in the land belonging to big farmers, who were ineligible to be covered under
the programme.

In Kerala against 40 per cent of expenditure required to be incurred on land management and soil and moisture
conservation works, the State Government spent only about 30 per cent of the amount on 1335 works under EAS in
fifteen blocks during 1993-98.

Land management works were not taken up at all during 1992-99 in Mizoram and Orissa.

BDOs in eight blocks of Meghalaya distributed Rs 91.80 lakh in cash to 2228 beneficiaries for construction of minor
irrigation and land development works at uniform rate irrespective of their area of land. The Directorate/DRDAs did not
maintain records of utilisation of the fund. Neither did they ascertain the extent of benefits accrued from them.

4.12.3 Construction of 'kachcha' rural link roads

Rs 164.64 crore were spent on construction of ‘kachcha’ rural link roads in 5 states contrary to the requirement of
construction of durable nature

Road works taken up under the programmes were to be of durable nature. Implementing agencies got executed
'kachcha' roads at Rs 164.64 crore between 1992-99 in Tripura (Rs 21.96 crore), Mizoram (Aizawl and Linglei
districts: Rs 28.20 crore), Assam (Six DRDAs: Rs 60.46 crore), Madhya Pradesh (CEO, 4 districts: Rs 45.80 crore)
and Nagaland (3 districts: Rs 8.22 crore).

DRDA, Jodhpur in Rajasthan released Rs 57 lakh to Rajasthan State Agricultural Marketing Board for execution of
rural road works between March 1991 and February 1992. The expenditure was to be met from JRY fund and
contribution from the Board was to be on 50:50 basis. The Board, however, spent Rs 56.56 lakh out of Rs 57.00 lakh
and did not contribute its share. The DRDA was yet to recover the Board share.

Physical verification of a few assets created under EAS/JRY was carried out by Audit in West Bengal with a view to
ascertaining their genuineness and maintenance. It revealed poor quality of construction of assets, works lying
incomplete, non-handing over of assets, etc. as detailed in Annex- 18.

4.13 Abandoned schemes (Annex - 19)

Midway abandoning of projects rendered Rs 10.12 crore infructuous

Implementing agencies abandoned 5252 schemes in 11 states midway after spending Rs 10.12 crore. The schemes
were aimed at creating durable assets like roads, irrigation channels, pucca dams, water harvesting structures, wells,
fishponds, etc. The main reasons attributed for abandonment were shortage of fund/delay in release of funds, public
protest, land disputes, etc.

4.14 Delay in completion of works (Annex - 20)

Under the programmes only those projects were to be taken up which could be completed within one to two years. In
several states there was time over run ranging between two and nine years in 27779 works. The executing agencies
attributed the delay in completion of works to local disputes, shortage of fund, lack of technical know-how, lack of
CHAPTER III Page 21 of 26

interest by beneficiaries, etc.

4.15 Maintenance of assets and inventory

The assets created under the programmes were to be maintained by the state/district level line
departments/Panchayati Raj Institutions. Adequate fund was to be provided by the states for maintenance of assets
taken over by the respective departments. Maintenance of assets under JRY was to be done by village
Panchayat/Mandal with 10 per cent of the total allocation to be provided for maintenance. Inventory of all assets
created under the programme was to be maintained by the implementing agencies. The assets were to be handed
over to the line departments/beneficiaries to ensure accrual of benefits/usufructs therefrom to the rural poor.

17 state governments did neither maintain inventory of assets created nor handed over the same to line
departments for maintenance

The state governments/implementing agencies neither maintained inventory of assets created nor handed over the
same to line departments/local organisations for maintenance in Madhya Pradesh, Meghalaya, Gujarat, Haryana,
Mizoram, Jammu & Kashmir, Manipur, Orissa, Tamil Nadu, Uttar Pradesh, Karnataka, Rajasthan, Goa, Kerala,
Nagaland, Himachal Pradesh and Tripura. In the absence of vital record of assets, their actual construction and
benefits reaching to beneficiaries could not be established. Some instances were as under:

In Tripura fund was not provided for maintenance of assets. BDO, Bishalgarh did not hand over 42 market sheds and
115 sales stalls constructed at the cost of Rs 24.87 lakh during 1994-98 to village panchayats and village level bodies
as of August 1999.

Plantations raised at Rs 10.58 crore were neither maintained nor handed over to executing agency for maintenance

In four districts of Karnataka, plantations raised by Forest Department during 1986-96 at a cost of Rs 10.58 crore
were neither handed over to Gram Panchayat nor maintained. In Dharwad and Gulbarga districts, DCF (Social
Forestry) did not maintain the plantations raised at a cost of Rs 41.28 lakh under EAS.

Register of plantations created at Rs 2.85 crore indicating their utilisation and handing over to beneficiaries was not
maintained

DRDA, Keonjhar in Orissa released Rs 3.20 crore to the Assistant Director, Sericulture for raising Arjun plantations in
760 hectare of land during 1994-97. He raised the plantations at Rs 2.85 crore through Tassar Rearing Co-operative
Societies. The Assistant Director did not maintain any register of asset created at Rs 2.85 crore indicating their
utilisation and handing over to the beneficiaries. The permission from revenue authorities for plantations on
government land was awaited.

In 15 blocks of three districts in Nagaland 43 Anganwadi buildings constructed at Rs 21.83 lakh under JRY and EAS
were not handed over to Social Welfare Department as of July 1999.

4.16 Miscellaneous financial shortcomings

The following other miscellaneous financial irregularities were noticed during examination of records in various states,
which suggested that the regulation of expenditure lacked accountability, approvals and sanction and possible
leakages, etc. Some instances, which were noticed in audit, are briefly discussed below:

Pondicherry: The Project Director accepted the expenditure of Rs 32.37 lakh reported by BDOs during 1992-98
without verification of vouchers under JRY.

Goa: The Rural Development Agency did not allocate fund to 29,49,52,15 and 31 village panchayats out of 188
panchayats each year between 1994-95 and 1998-99. Further, the RDA released Rs 8.63 lakh to 15 Panchayats,
which was not accounted for by them between 1994-98 and five village panchayats did not account for Rs 2.35 lakh
released to them by RDA between May 1997 and April 1999.

Extra expenditure of Rs 7.61 crore was incurred in execution of works on task rates instead of Rural Standard
CHAPTER III Page 22 of 26

Schedule rates

Madhya Pradesh: The CEO, Bilaspur got executed works costing Rs 76.07 crore, under JRY and EAS on task rates,
which were higher than the Rural Standard Schedule Rates (SOR) fixed by the Rural Development Department. The
task rates were higher by 10 to 180 per cent. The extra expenditure on the above work would work out to Rs 7.61
crore.

CEO, ZP, Mandla, made excess payment of Rs 26.47 lakh to Madhya Pradesh State Civil Supplies Corporation
Limited towards payments at higher rate on supply of 20358.94 quintals of fine quality rice. Further CEO, Mandla, paid
Rs 56.92 lakh to the District Central Co-operative Bank (DCCB) for distribution of rice under PDS in 1992-93. DCCB
again included the above amount in the accounts rendered in February 1998, resulting in double payment of Rs 56.92
lakh to DCCB. The CEO, Mandla reported in April 1999 that action would be taken for reconciliation of accounts.

Karnataka: The state government did not reimburse subsidy of Rs 8.25 crore towards difference between the Central
Issue Price and PDS price on foodgrains procured from FCI and distributed to workers to JRY fund as of March 1999.

Jammu & Kashmir: The Director, Rural Sanitation, Jammu spent Rs 1.38 crore up to March 1999 on execution of
1814 rural sanitation works against Rs 1.53 crore received for 4347 works. There was, thus, abnormal mismatch
between the physical and financial progress.

The manner of utilisation of Rs 28.19 crore lying unspent under IJRY was not on record

Uttar Pradesh: The Commissioner (RD), Lucknow did not transfer the balances of Rs 28.19 crore lying unutilised
under IJRY since January 1996 on its merger with EAS as of June 1999 as contemplated in the guidelines. The
manner in which the fund was utilised was not on record.

Arunachal Pradesh: The BDO, CD Block Dirang under DRDA, Bomdila disbursed wages of Rs 99.76 lakh to workers
under EAS during January 1996 to December 1998 without recording transaction in cash book. Cheques received
from DRDA for payments of wages were also not accounted for in the cash book. Records showing receipt of
cheques/drafts since 1993-94 to December 1995 were also not furnished,

Bihar: DRDA, Dhanbad advanced Rs 43.09 lakh to Mayank Printing Press during June to September 1998 for printing
of stationery without inviting tenders and assessment of requirement. Rs 18.87 lakh remained unadjusted/unrecovered
as of May 1999. Further DRDA, Dhanbad and East Champaran paid Rs 20.37 lakh as sales tax and Bazar Samiti tax
on foodgrains supplied by FCI during 1992-97 from JRY fund which was to be borne by the state government. The
DRDAs did not obtain reimbursement as of May 1999.

Orissa: DRDA, Kalahandi released Rs 37.63 lakh to 27 Voluntary Organisations during 1995-99. Of which, only three
acknowledged receipt of Rs 2.50 lakh. Similarly DRDA, Ganjam released Rs 66.91 lakh to Voluntary Organisations
during 1996-99 for execution of work, without ascertaining their financial status, past experience and administrative
infrastructure available with them. Utilisation certificate for the full amount of release/details of works done even after 3
years of release of fund were pending.

Against cost norm of Rs 21640 fixed by Panchayati Raj Department, the average expenditure on construction of wells
was very high and ranged between Rs 0.50 lakh and Rs 2.94 lakh in eight districts during 1995-99. The total number
of wells dug during this period was 1917 at a total cost of Rs 15.99 crore as detailed in the table below:

(Rs in lakh)

Districts Year No. of wells constructed Total expenditure Average expenditure

Bhadrak 1996-97 118 108.42 0.92
Gajapati 1995-96 152 221.05 1.45
Balasore 1998-99 85 79.73 0.94
Kendrapura 1996-97 43 70.75 1.65
CHAPTER III Page 23 of 26

Koraput 1996-97 382 264.54 0.69

Mayurbhanj 1996-97 993 498.95 0.50
Nayagarh 1996-97 28 82.18 2.94
Rayagada 1996-97 93 225.26 2.42
1997-98 23 47.90 2.08
Total 1917 1598.78

Thus, the total cost of digging 1917 wells was Rs 15.99 crore, which was about 4 times higher than the normative cost
of Rs 4.15 crore.

4.17 Accountability structure and acceptability procedure

The scheme did not provide clearly demarcated accountability structure nor did it prescribed periodic accountably by
procedure. In the absence of any system of annual inspection for accountability for evidence in support of the
employment generated and correct reporting, their was a general tendency for exaggeration of achievements and non-
maintenance of evidence in support of delivery.

4.18 Monitoring

At the central level, the Ministry is responsible for planning, implementation, financing and monitoring the overall
performance of the programmes. A Review Committee comprising Secretaries in the Prime Minister's Office, Ministry
of Rural Development, Department of Women and Child Development, and department of Post was to meet weekly to
identify the problem areas to take mid term corrective steps. The Ministry was also to ensure success of the
programmes through intensive field visits by Area Officers. The guidelines also envisaged submission of periodical
financial and physical progress reports by state governments/ DRDAs to keep a close watch on the quality and trend
of implementation.

The monitoring, control, inspecting and review mechanism of Union and state governments and district levels were
insufficient to ensure correctness of the reported financial and physical achievement under the programme. Because
of this, the executing agencies at the state levels continued to report inflated and incorrect physical and financial
achievements without any accountability.

The monitoring, control, inspecting and review mechanisms at apex level by the Ministry and state governments and
at district level were insufficient to ensure effective implementation

No evidence was available with the Ministry to indicate monitoring the implementation and attainment of the basic
objective of generation of adequate mandays of employment. The Ministry merely compiled data on physical and
financial achievements received from states/UTs. There was no evidence of follow-up action on the
shortcomings/irregularities in the progress reports received by the Ministry. The field inspections carried out by the
Area officers of the Ministry were inadequate quantitatively and qualitatively.

The State Level Coordination Committee for the Rural Development Programmes was responsible for overall
supervision, guidance and monitoring of the programmes. The SLCC was to meet regularly to review the progress of
implementation of the programmes. A schedule of inspections, prescribing the minimum number of field visits for each
supervisory level functionary from state government to block level was to be drawn up and approved by SLCC. The
state governments were also to constitute Employment Assurance Scheme Committee in every district and block for
supervising the implementation of EAS.

Officers at the district, sub-division and block levels were to closely monitor all aspects of the programmes through
field visits at work sites. Divisional Commissioners and Collector, were to constitute vigilance squads to undertake
intensive inspection of the works in the districts under their jurisdiction regularly to ensure quality of works and
payment of wages.

SLCC did not meet regularly in eight states

CHAPTER III Page 24 of 26

SLCC did not even meet once to monitor the implementation of the programmes in Jammu & Kashmir, Pondicherry,
Andhra Pradesh (after 1994-95), Orissa and Rajasthan. In Rajasthan, the SLCC was constituted only in November
1998. The details of meetings held by SLCC were not available in Madhya Pradesh and Tamil Nadu. In Sikkim and
Maharashtra, it met only once since its formation. The SLCC in Karnataka met only thrice during 1992-96 and never
thereafter. In Sikkim, Orissa, Punjab, Madhya Pradesh, Himachal Pradesh, Uttar Pradesh, Gujarat, Karnataka
(Tumkur district), Tamil Nadu (2 districts), Assam and Rajasthan, District and Block level committees were either not
formed or did not meet even if formed.

Schedule of inspection was not drawn out or inspections not carried out in Sikkim, Haryana, Rajasthan, Manipur,
Pondicherry, Madhya Pradesh, Himachal Pradesh, Orissa, Jammu & Kashmir, Tamil Nadu, Nagaland and
Bihar.

Records of inspections carried out were not maintained or furnished in Kerala, Manipur, Pondicherry, Assam,
Madhya Pradesh, Dadra & Nagar Haveli and Bihar. Tour inspection notes were not prepared or no follow up action
was taken in Kerala, Rajasthan, Punjab, Uttar Pradesh and Jammu & Kashmir.

The prescribed periodical physical and financial reports were not submitted in Goa, Kerala, Assam, Karnataka and
Tamil Nadu. In Madhya Pradesh, Pondicherry and Rajasthan, the delay in receipt of reports ranged from one
month to above 19 months.

Vigilance squads were either not constituted or when constituted, records relating to their findings were not furnished
in Orissa, Karnataka, Sikkim, Rajasthan, Manipur, Madhya Pradesh, Himachal Pradesh, Nagaland, Goa and
Assam. While in Andhra Pradesh, the State Level Vigilance Committee though formed in March 1997, had not met
as of October 1999.

4.19 Evaluation

Overall evaluation studies were not got conducted in all the states except Uttar Pradesh

Evaluation of impact of implementation of rural employment generation programmes is an important aspect of effective
administration thereof. The Ministry and State governments were to undertake evaluation studies from time to time to
assess the extent to which the programmes had been successful in generating employment for the rural workers and
whether the achievements were commensurate with the investments made. However, overall evaluation studies were
not got conducted for all the states except for Uttar Pradesh where a team from Government of India conducted
evaluation studies of EAS in Sitapur district in January 1995 and pointed out unsystematic registration and
maintenance of family cards, inadequate provision of employment to registered workers, execution of works through
contractors, payment of wages at lower rate than the prescribed minimum wages, non-availability/fabricated muster
rolls, high and often fictitious estimates not based on ground realities, etc. Yet no further overall evaluation of
implementation of the programmes and their impact was conducted thereafter.

The impact of JRY was not conducted after May 1994. The last concurrent evaluation of JRY conducted in June 1993
and May 1994 brought out negligible provision of per person mandays of employment, higher non-wage component,
provision of only 16.59 per cent on employment, poor quality/non-maintenance of created assets, etc.

4.20 Previous recommendation of PAC

Previous recommendations of the Public Accounts Committee and administrative inaction on significant
recommendations of the Public Accounts Committee was also evident. Some of the important observations and
recommendations in its 94th report on National Rural Employment Programme were as under:

z Provision of adequate employment to make it remunerative besides being productive and provision of adequate
resources for generation of sufficient mandays of employment and on a sustained basis.

z Formulation of single development plan by a Single Development Authority to make it responsible and
accountable for effective implementation and making it possible for beneficiaries to obtain adequate assistance
to enable them to cross the poverty line in one go and in lasting manner.
CHAPTER III Page 25 of 26

z Comprehensive economic survey of rural areas to identify people living below poverty line and people in need
of employment.

z Registration of workers and issuing the identity cards to them for watching employment generation to the
registered workers.

z Maintenance of authentic records like muster rolls susceptible of verification in order to maintain correct position
of achievements of generation of employment.

z Dovetailing of all works with an overall plan for rural development with explicit focus on prioritization of assets to
be created, etc.

As would be seen from the results of audit review brought out above, none of the recommendations of the Public
Accounts Committee have been implemented with any degree of success by the Ministry. All shortcomings pointed out
in the previous Audit Reports and those identified by the Public Accounts Committee persist unabated.

4.21 Conclusions

Successive performance audits have established the following fundamental shortcomings in the execution of the
programmes:

i. Insignificant financial resources for providing on an average not more than about 16 days of employment during
each year to the target population due to extremely thin spread of resources is not likely to have any impact
either in tackling the magnitude of rural un-employment or making a perceptible dent on rural poverty.

ii. Failure of the Ministry, state governments and DRDAs/Zila Parishads to ensure credible evidence of delivery
raises doubts about the extent of actual employment generated even out of the meagre amount provided by the
government for this activity. The veracity of the claims of employment generation is to be established through
(a) proper targeting, including registration of the employment seekers, (b) issue and maintenance of family
cards, (c) proper maintenance of muster rolls and measurement books and (d) proper inventory of assets with
adequate details so as to facilitate easy verifications by inspecting and audit teams. Since none of these was
maintained, the claim of employment generation remains unverifiable.

iii. Added to this, Government’s inability to address the basic issue of deficient reporting of employment generation
by the DRDAs/Zila Parishads and state governments by mechanically calculating the wage component of the
expenditure by the minimum wage has further compounded the magnitude of the problem of ensuring
appropriate evidence for actual employment generation.

iv. Absence of reliability and the resultant fallacy of the claim of employment generation is further established by
the fact that DRDAs and state governments have included even those amounts which were parked in PLAs,
Revenue and Civil Deposit Accounts, banks or were advanced to the implementing agencies whose utilisation
reports were awaited in their theoretical calculation of employment generated.

v. The problem of targeting and generation of awareness amongst the intended population, through a
comprehensive and transparent process of registration and the establishment of control systems through
compulsory family cards of the employment seekers is yet to be achieved, despite the programme being in
operation for at least over two decades.

vi. The monitoring control, inspecting and review mechanisms at the apex level by the Union and state
governments and at the district level are insufficient to ensure correctness of outputs.

These persistent shortcomings erode the value for money spent on these programmes and cast serious doubts on the
extent of the proclaimed inputs. The programmes appear to be running in a routine manner indifferent to the
implementation lag, bottlenecks in execution and unverifiable outputs.
CHAPTER III Page 26 of 26

([Link])
Director General of Audit
New Delhi Central Revenues

Countersigned

([Link])
Comptroller and Auditor General of India
New Delhi