Economic & Political
january 2, 2010 vol xlv no 1
does not function in a vacuum and is vul-nerable, in some respects, to the samepressures as the system that preceded it.Social hierarchies which bind workers in afeudal and exploitative relationship withgram panchayat ofﬁ cials and contractorsare deep-rooted rural realities, which arebound to exert their inﬂ uence on the sys-tem of bank payments as well. Findingsfrom previous surveys and social audits inOrissa in 2007 as well as in Deogarh(Jharkhand) in October 2008 have shownthat even wage payments through banksare not free of the maladies which afﬂ ict-ed the previous system of payments: cor-ruption, fraud and misconduct (Vanaik and Siddhartha 2008; Drèze and Khera2008; Kar 2009).The most disturbing ﬁ ndings haveemerged from a recent social audit of ﬁ vegram panchayats in the Karon block of Jharkhand’s Deogarh district, where theearlier nexus of corruption between con-tractors and gram panchayat ofﬁ cials nowincludes banks as well.
In a case of bla-tant collusion, in the Ranidih gram pan-chayat, it was found that contractors hadbeen siphoning off funds from the ac-counts of
workers in connivancewith the ofﬁ cials of a cooperative bank.The workers’ accounts were brazenly manipulated by the contractors; in fact,many workers were completely unawarethat an account had been opened in theirname! Other irregularities included ask-ing
workers to sign withdrawalslips in bulk (for the purpose of “proxy withdrawals” in their name), and extort-ing money from workers after they with-drew money from the bank. For instance,in the Ganjebari gram panchayat of thesame district, the local postmaster hadtaken signatures of the
workerson blank withdrawal slips, in collusionwith a contractor, making it possible forthem to extract money from their postofﬁ ce accounts.As this experience illustrates, the systemof bank payments is not a fool-proof pro-tection against corruption, and the groundrealities can be quite different from whatone might expect from the positive argu-ments presented earlier. However, bank payments certainly offer useful opportuni-ties for tightening the noose. In order toexplore these issues more deeply, determinewhether Deogarh was an isolated case orthe manifestation of a more widespreadproblem, and more generally to evaluatethis new system of
wage payments,a survey focusing speciﬁ cally on bank payments was undertaken.
1.3 Survey Method
Our survey covered two blocks each inAllahabad district (Uttar Pradesh) andRanchi district (Jharkhand). In Allahabad,the sample blocks wereKarchana and Shankar-garh. Karchana is wellconnected to Alla-habad city and, beingclose to the Ganga, ispredominantly agri-cultural land. In com-parison, Shankargarhis relatively remoteand has a primarily rocky terrain, with silica mining and rock breaking as the main activities. In Ranchidistrict, both sample blocks (Mander andAngara) are relatively accessible from thecity of Ranchi. Mander lies in the plains,with most land under agriculture. Angara,on the other hand, has a hilly terrain, andsome Maoist activity is palpable here.As mentioned earlier, gram panchayatsare the main implementing agenciesunder the
. In Allahabad district, theimplementation of the
is largely carried out by the sarpanch and the pan-chayat secretary on behalf of the grampanchayat. In Jharkhand, however, thereare no gram panchayats (because grampanchayat elections are yet to take place),and the
is primarily implementedby the block administration with thepanchayat secretary and the
(de facto entrepreneur).
The absence of gram panchayats and other grass rootsinstitutions in Jharkhand has given spaceto private contractors and middlemen. Theblock administration and panchayat secre-tary, incapable of implementing and moni-toring
works on their own, oftencontract them out (in effect) to private par-ties. Since there is no role for private con-tractors in
, these private playerscan only make a proﬁ t through swindling.Two payment agencies (i e, speciﬁ cbanks, or post ofﬁ ces where applicable)were selected in each block (see Table 1).From these, ﬁ ve “Payment Orders” (themost recent) for worksites in differentgram panchayats were chosen for veriﬁ ca-tion.
Thus, the survey covered ﬁ ve grampanchayats in each block.
Twenty work-ers were randomly selected from eachpayment order, and banks were asked tofurnish their account details.Banks were also asked to share thedetails of the gram panchayat accounts,for the sample gram panchayats. Theveriﬁ cation process involved interviewingas many as possible of the 20 workers se-lected in each gram panchayat, followedby a public veriﬁ cation of all the entries inthe payment order. Awareness generationaround the system of bank payments wascarried out simultaneously.
1.4 Socio-economic Background
We interviewed a total of 259 workers, of which 201 (78%) were men and 58 (22%)were women. This male-dominated sam-ple reﬂ ects the fact that the paymentorders we based our sample on had a highproportion of males. That, in turn, ispartly due to the relatively low participa-tion of women in
in the sample dis-tricts. Another reason, however, is that the
workers listed on the paymentorders are those who have a bank (or postofﬁ ce) account. We often found that wom-en workers did not have an account intheir name and received their wagesthrough their husbands’ accounts. To thatextent, there is an under-representation of women workers in our sample.As one might expect, education levelsamong
workers were relatively low.Almost half (45%) of the sample workerswere illiterate, with only 21% having com-pleted class 10. In Allahabad district, castedivisions were palpable with spatial segre-gation also clearly visible. Members of theupper castes were economically better off,
Table 1: Sample Payment Agencies
District Block Sample Payment Agencies
Allahabad Karchana Bank of Baroda, Eastern Uttar PradeshGrameen Bank (Panchdeora, Bhaderwa andBharaon branches)Allahabad Shankargarh Bank of BarodaBank of Baroda, Eastern Uttar PradeshGrameen Bank (Lohgarh and Bashara Uperhar branches)Ranchi Angara Jharkhand Grameen BankPost office (Jonha and Tati Silway branches)Ranchi Mander Ranchi-Khunti Central Cooperative BankUnited Bank of India