Why is it in the news?

• As per the Ministry of Rural Development, in the ongoing financial year, less than 14% of the amount flagged by the auditors has been recovered so far.

More about the news

• Social audit units in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme are meant to detect and report cases of corruption and malpractice.
• However, the recovery of embezzled funds identified by these audit units has been ineffective.
• In the ongoing financial year, misappropriation of ₹27.5 crore was flagged, but only ₹1.31 crore (13.8%) has been recovered.
• In the financial year 2022-23, the recoverable amount was ₹86.2 crore, but only ₹18 crore (20.8%) was recovered.
• In 2021-22, ₹171 crore was flagged, but only ₹26 crore (15%) was recovered.
• Section 17 of the Act governing the scheme assigns the Gram Sabha the responsibility to monitor the execution of works.
• Social audit units are supposed to work independently of implementing authorities. Their primary role is to flag cases of malpractice. However, the social audit units lack funds, training, and adequate personnel.
• Recovering the misappropriated funds and taking action against responsible officials falls under the purview of State governments.
• The Union government has been using the lack of social audits as a reason to withhold funds for MGNREGA in states.
• However, the Ministry, responsible for funding the social audit units, has been slow in disbursing funds to maintain their independence from the states.
• Some states consistently report “zero number of cases” and make “zero recoveries” over the past three years. States such as Telangana have active social audit units that flag cases, but the recovery rate remains low.
• The poor recovery rate threatens the credibility of the audit process, rendering it futile.
• Some states that identify multiple cases of misappropriation face criticism for not making adequate recoveries.
• States with no reported cases of misappropriation indicate a lack of effective monitoring.

Social Audit and MGNREGA

• Social audit is the joint audit of a scheme conducted by both the government and the affected or beneficiary population.
• Differs from financial audits, which focus on financial transactions and the organization’s financial health.
• Section 17 of MGNREGA mandates social audits for all program works.
• Social Audit Units receive funds equivalent to 0.5% of the previous year’s MGNREGA expenditure incurred by the state.
• Includes quality checks on MGNREGA infrastructure, identification of financial misappropriation in wage payments, and assessment of procedural adherence.
• A report titled ‘Social audit calendar vs audits completed’ noted that only 14.29% of planned audits were completed in 2021-2022.
• Failure to conduct MGNREGA social audits can result in action, including withholding of funds, as per the Union Rural Development Ministry.
• Delays in releasing administrative funds from the Centre have left some Social Audit Units financially strained.

Challenges

• Inadequate administrative and political will hinders the independence of social audits and contributes to corruption.
• Social audit units and facilitators often face difficulties accessing primary records for verification, and there is a lack of cooperation.
• Limited participation due to low education, awareness, and capacity among the population.
• No independent agency to investigate and act on social audit findings.

 Way Forward

• Citizen groups should advocate for stronger social audits to hold authorities and agencies accountable.
• Establish teams of social audit experts in each district responsible for training stakeholders.
• Develop training programs on social auditing methods, including conducting audits and preparing reports.
• Establish an institutionalized framework for social audits with the endorsement and support of multiple authorities to ensure its integrity.