The Comptroller and Auditor General’s (CAG) review of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in Karnataka identified procurement violations, payment delays, irregular recruitment and suspected fraud, pointing to systemic weaknesses in implementation between 2019-20 and 2023-24.
The report, which was tabled in the Legislative Assembly on Tuesday, was released amid an ongoing dispute between the Union and state governments over the scheme.
By examining its implementation across gram panchayats, the audit highlights gaps in compliance, monitoring and implementation under the MGNREGA Act, which guarantees up to 100 days of paid employment to rural families.
Access to the scheme itself remains uneven. Distribution of job cards was pending for 34,499 applicants, while cards issued in several regions did not adhere to the specified formats. No special work cards were issued to persons with disabilities. The report indicated that these gaps affect access to secure employment opportunities.
The primary objective of the scheme was also not achieved, the report said. More than 48% of families did not obtain job opportunities, and only 5% of them obtained a full 100 working days. Most families were given between 1 and 30 days. “It was not possible to provide 100 working days,” the report stated.
Procurement practices emerged as a major concern. The audit found that rules under the Karnataka Transparency in Public Procurement Act were often bypassed, with procurement exceeding $5 lakh without inviting tenders.
“Purchase merchandise that exceeds $5 lakh were implemented without invitation to bids, and similar problems were observed in outsourcing, where HR services contracts were extended without fresh bids being submitted, the report noted.
Also, recruitment under this scheme did not follow the prescribed standards. “Nodal staff were appointed for the project without following the state’s reservation policy,” the report said, adding that this “resulted in inadequate representation of women, scheduled castes, scheduled tribes and persons with disabilities.”
Delays in payment of wages and administrative bottlenecks have affected workers further. The review concluded that the arrears amounted to… $1.28 lakh crore remained unpaid for several years. “Over the past seven years, beneficiaries have reached arrears $It said Rs 1.28 lakh crore remained unpaid, and recommended “repair of liability for this loss and review of pending business status”.
Issues related to Aadhaar have exacerbated the problem. Of the 84.98 lakh active workers under MGNREGA, Aadhaar mapping was pending for 3,11,000 accounts as of March 2024, meaning “no payment and payment vouchers can be prepared for these active workers”.
The report was also recorded $35.10 crore outstanding in rejected and renewed wages and materials transactions on Aadhaar basis.
The audit noted discrepancies in attendance records and called for a closer audit, recommending “an investigation into fraud and discrepancies in attendance while carrying out work under the scheme.”
Violations in the implementation of work were widespread. The audit documented cases of payments for homes that had already been completed, to ineligible beneficiaries, and in some cases, without any construction activity. “Fraudulent transactions such as payment for houses that have already been completed, payment to ineligible beneficiaries, payment without commencing construction, payments beyond the prescribed limit… have been observed within the housing business,” it said.
Similar problems were found in projects related to solid waste management sheds, check dams and the planting of seedlings under social afforestation, where “fake documents and fraudulent payments” were uncovered. Physical verification revealed that some of the assets created under MGNREGA were either non-existent or no longer operational.
Poor record keeping and planning at the gram panchayat level further undermined implementation. Many panchayats did not maintain proper records, workers’ demand was incorrectly recorded and annual work plans were not prepared. The audit also noted “printing of collection lists without use of NREGA program and irregular payments on corrected collection lists.”
It also became clear that oversight mechanisms are insufficient. The Social Audit Unit faced staff shortages, delays in disbursing funds, and inability to access documents. “The social audit unit suffers from institutional weaknesses such as violation of criteria for appointing directors, staff shortages, lack/delay in disbursement of funds, and unavailability of documents for audit,” the report said.
