Under the Mahatma Gandhi National Rural Employment Guarantee Act, provisions are there for audit and accountability of expenditure. This information was given by Shri Pradeep Jain ‘Aditya’ Minister of State in the Ministry of Rural Development in a written reply in Rajya Sabha. The house was informed that MGNREGA is demand driven legislation and the Central Government releases funds to the States as per the projections made in the approved labour budget which is based on physical and financial performance of the State in the previous financial year. As per prescribed norms, the States are required to submit district and month-wise projections as agreed to in the labour budget. First installment is released in April/May subject to a minimum of 50% of agreed labour budget after adjusting the opening balance available with the State/districts. For second installment, the States are required to submit their release proposals in prescribed format alongwith Audit Report of the Chartered Accountant and Utilization Certificate showing utilization of atleast 60% of the available funds.

Audit-linked fund release: compliance with labour budget projections and certified utilization required before subsequent instalments are released. Disbursement is structured in instalments with conditionality for subsequent releases: an initial instalment is released early in the financial year subject to a prescribed minimum of the agreed labour budget after adjustment for opening balances, and later instalments require States to submit prescribed release proposals with a Chartered Accountant audit report and a Utilization Certificate demonstrating prescribed minimum utilisation of available funds.