A Comptroller and Auditor General (CAG) audit of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in Karnataka has identified procurement violations, payment delays, irregular recruitment and suspected fraud, pointing to systemic weaknesses in implementation between 2019-20 and 2023-24. CAG audit flags gaps in MGNREGA execution in Karnataka
The report, tabled in the legislative assembly on Tuesday, was released amid an ongoing dispute between the Union and State governments over the scheme.
Examining its execution across gram panchayats, the audit highlights gaps in compliance, monitoring and delivery under MGNREGA, which guarantees up to 100 days of wage employment to rural households.
Access to the scheme itself remains uneven. Distribution of job cards was pending for 34,499 applicants, while in several districts, issued cards did not adhere to prescribed formats. Special job cards for persons with disabilities were not issued. These gaps, the report indicated, affect access to guaranteed employment.
The report said that the scheme’s core objective has also not been met. More than 48% of families were not provided employment, and only 5% received the full 100 days of work. Most households were given between one and 30 days. “It was not possible to provide 100 days of employment,” the report stated.
Procurement practices emerged as a key concern. The audit found that rules under the Karnataka Transparency in Public Procurement Act were frequently bypassed, with purchases exceeding ₹5 lakh made without inviting tenders.
“The procurement of goods exceeding ₹5 lakh was done without inviting tenders,” the report noted. Similar issues were observed in outsourcing, where contracts for human resource services were extended without fresh bids.
Recruitment under the scheme also did not follow prescribed norms. “Contract staff for the project was recruited without following the state’s reservation policy,” the report said, adding that this “resulted in inadequate representation of women, SCs, STs, and persons with disabilities.”
Delays in wage payments and administrative bottlenecks have further affected workers. The audit found that arrears amounting to ₹1.28 crore have remained unpaid for several years. “Over the past seven years, the arrears of beneficiaries amounting to ₹1.28 crore have remained unpaid,” it said, recommending that “the responsibility for this loss should be fixed and the status of pending works should be reviewed.”
Aadhaar-related issues compounded the problem. Of the 84.98 lakh active workers under MGNREGA, Aadhaar mapping was pending for 311,000 accounts as of March 2024, which meant “preparation of pay slips and payment to these active workers could not be done.”
The report also recorded ₹35.10 crore pending in rejected and revived Aadhaar-based wage and material transactions.
The audit pointed to discrepancies in attendance records and called for closer scrutiny, recommending “an investigation into the fraud and discrepancies in attendance while carrying out works under the scheme.”
Irregularities in execution of works were widespread. The audit documented cases of payments made for houses already completed, to ineligible beneficiaries and, in some instances, without any construction activity. “Fraudulent transactions such as payment for houses already completed, payment to ineligible beneficiaries, payment without taking up construction, payments beyond the prescribed limit… have been observed under housing works,” it said.
Similar issues were found in projects related to solid waste management sheds, check dams and sapling cultivation under social afforestation, where “fake documents and fraudulent payments” were detected. Physical verification revealed that some assets created under MGNREGA were either non-existent or no longer functional.
Weak record-keeping and planning at the gram panchayat level further undermined implementation. Many panchayats did not maintain proper registers, worker demand was recorded incorrectly and annual work plans were not prepared. The audit also noted “printing of muster rolls without using NREGA software and irregular payments on such corrected muster rolls.”
Oversight mechanisms were also found to be inadequate. The Social Audit Unit faced staff shortages, delays in fund release and lack of access to documents. “The Social Audit Unit is suffering from institutional weaknesses such as violation of norms in appointment of directors, shortage of staff, shortage/delay in release of funds and non-availability of documents for audit,” the report said.