MGNREGA Faces Widespread Scrutiny As Audit Uncovers Fake Projects, Corruption And Payments To The Deceased

A detailed vigilance audit by the Ministry of Rural Development has brought to light extensive financial and administrative irregularities in the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), with discrepancies running into hundreds of crores of rupees. The investigation, conducted during the current financial year up to November, covered 55 districts across 25 states and Union Territories and identified over 11 lakh instances of irregularities, amounting to an estimated financial misuse of more than Rs 300 crore.

According to the findings, funds meant for providing employment and creating rural assets were often diverted through collusion between officials, contractors, intermediaries and, in some cases, bank personnel. Several works existed only in official records, while no activity was found on the ground. Andhra Pradesh, Tamil Nadu and West Bengal recorded the highest number of such cases during the audit period, which spanned just eight months from April to November 2025.

The report highlights a consistent pattern of manipulation, including artificial splitting of large projects into smaller components to bypass approval norms, engagement of contractors despite prohibitions, and showing elderly individuals—some over 80 years old—as active workers. Procurement-related lapses were also common, with repeated purchases from the same vendors, duplicate payments against single tenders, and missing documentation related to GST and royalty payments.

Inspections at more than 1,000 worksites revealed non-existent projects, execution of unauthorised works, misuse of funds, and inflated muster rolls. Governance failures were evident through fake or inactive job cards, poor-quality or incomplete assets, and works that did not meet local needs. Weak monitoring systems allowed such practices to flourish, particularly in the early years of the scheme, when records were poorly maintained and verification mechanisms were either absent or ineffective.

The audit estimated over Rs 302 crore as recoverable, of which the majority has already been recovered. The probe covered multiple districts across states such as Tamil Nadu, Kerala, Andhra Pradesh, Punjab, Uttar Pradesh, Gujarat, Bihar, Chhattisgarh and Jammu and Kashmir, among others.

One of the most serious findings involved payments made in the names of deceased individuals and multiple job cards issued to the same person. In many areas, there was no photographic or geo-tagged evidence of completed works. Middlemen allegedly siphoned off money meant for labourers, exploiting gaps in record-keeping at the panchayat level, where field staff were burdened with maintaining dozens of registers, increasing the scope for errors and manipulation.

Post-2014 reforms were introduced to tighten controls, including mandatory Aadhaar linking, geo-tagging of assets, and direct electronic transfers to workers’ bank accounts. These measures significantly increased transparency, with Aadhaar-linked workers now numbering over 12 crore and all payments routed through electronic systems.

Reacting to concerns around corruption, Union Minister Shivraj Singh Chouhan said the scheme had earlier suffered from systemic misuse, including machine-led work, contractor dominance, inflated estimates and fake job cards. He maintained that recent reforms and the introduction of a revamped rural employment framework have addressed these issues, increased guaranteed workdays, and strengthened accountability mechanisms.

Ground reports from several states, however, suggest that challenges persist. In Bihar’s Bhagalpur district, a panchayat-level scam involving nearly Rs 20 crore surfaced, where no actual work was carried out despite funds being withdrawn. Similar complaints emerged from Munger, where farmers alleged repeated fund withdrawals for canal cleaning that was never done, resulting in crop damage due to flooding.

In Jharkhand’s Sahibganj district, villagers accused middlemen of demanding money from beneficiaries under the goat shed scheme, while incomplete constructions were shown as finished to release payments. In Chhattisgarh, job card holders reported not receiving work for years despite being officially registered, leaving families struggling without income support.

Madhya Pradesh saw allegations of fraudulent payments made against job cards of deceased individuals, prompting court intervention and a Lokayukta probe. In Uttar Pradesh, inspections revealed that works were recorded on paper with dozens of labourers listed, but no workers were present at sites during visits, raising doubts about the authenticity of muster rolls.

Officials in several districts have assured inquiries and corrective action where violations are confirmed. While the government maintains that systemic reforms have largely eliminated corruption, the audit and field investigations indicate that deep-rooted issues at the local level continue to undermine the objectives of the rural employment guarantee programme.