The audit undertaken by the Comptroller and Auditor General of the programme launched by the Rural Development Ministry in 2006 found that works amounting to around Rs 4,070 crore were incomplete even after one to five years of launching.
The CAG noted that employment generated declined from 283.59 crore persondays in 2009-10 to 216.34 crore persondays in 2011-12.
The completion of works also saw a significant decline in 2011-12. "There were deficiencies in the approval and release of funds by the ministry.
Numerous instances were noticed in which the ministry released grants in excess of demand and in breach of its own conditionalities," says the report tabled in Parliament today.
"In fact, in 2010-11, the ministry relaxed all conditionalities (except furnishing utilisation certificate) associated with the release of funds. No basis for this decision was provided by the ministry," it said and noted that Rs 1,960.45 crore were released in March 2011 alone, without exercising proper financial controls.
The CAG asked the Government to take "decisive steps" to ensure proper implementation of the scheme. "It needs to focus on developing intensive monitoring and evaluation systems," the Government auditor said.
Analysing implementation of programme, the report said in the test checked districts of 25 states and Union Territories, 1,02,100 "inadmissible works" amounting to Rs 2,252.43 crore were undertaken.
These inadmissible works included construction of kutcha roads, cement concrete roads, raised platforms for cattle and other animals and bathing ghats.
The performance audit of the implementation of MNREGA wastaken up by the CAG in response to a request from the Rural Development Ministry and covered the period from April 2007 to March 2012.
Irregularities were noticed in the works undertaken under MNREGA, the CAG said.
The CAG, which checked the implementation of the scheme in 3,848 gram panchayats in 28 states and four Union Territories, said works amounting to Rs 4,070.76 crore were incomplete "despite passage of significant time, rendering the expenditure unfruitful".
It said monitoring at the Central level was "unsatisfactory" and the Central Council could not fulfil its statutory mandate of establishing a central evaluation and monitoring system even after six years of its existence.
"The only monitoring activity carried out was in the form of 13 adhoc field visits to six states by the Council members. No follow-up action was taken on these field visits by the Council," the CAG said.
Noting that there were substantial differences between the data uploaded in the MIS and actual records maintained, the CAG said states were not entering data on regular basis and, "cases of data manipulation, without any reference to basic records and without any apparent basis, were also noticed".
Analysis of data related to the performance of the scheme showed there has been significant decline in per rural household employment generation in the last two years.
"The per rural household employment, declined from 54 days in 2009-10 to 43 days in 2011-12," it said. There was also a substantial decline in the proportion of works completed in 2011-12 mainly in Bihar, Maharashtra, Uttar Pradesh, which together account for 46 per cent of the rural poor.
Only 20 per cent of the central schemes funds were utilised in these states. "This indicated that the correlation between poverty levels and implementation of MNREGA was not very high," the CAG said.