28 May VB-G-RAM-G : New Scheme Replaces MGNREGA from July 1
This article covers “Daily Current Affairs”
SYLLABUS MAPPING : GS Paper 1 , 2 , 3 : Society , Social Issues , Governance , Economy
FOR PRELIMS : MGNREGA, VB-G RAM G Act 2025, Gramin Rozgar Guarantee Card, National Level Steering Committee, NLSC
FOR MAINS : MGNREGA has served as a counter-cyclical economic stabiliser during droughts, floods, and pandemics — absorbing rural distress through demand-driven employment expansion. Assess whether VB-G RAM G’s normative allocation model, with its 60-day agricultural pause and performance conditionalities, adequately preserves this safety net function, and suggest institutional safeguards to protect against exclusion of vulnerable rural workers.
Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (originally NREGA) — landmark rights-based legislation guaranteeing 100 days of unskilled manual work to every rural household annually. Demand-driven — households apply for work, state government must provide within 15 days or pay unemployment allowance. 100% centrally funded for wages. Transformed rural employment, reduced distress migration, and empowered women (over 58% of MGNREGA workers are women).
Peak implementation — 250+ crore person-days generated annually. Significantly reduced rural poverty; raised rural wages. Evidence showed MGNREGA functioned as an automatic economic stabiliser — employment surged during droughts, floods, and COVID-19 (2020–21). Praised globally as a model for rights-based social protection.
Budget allocations stagnated relative to demand; real wages declined. Wage delays became systemic — often 3–6 months. Government publicly criticised MGNREGA as a “monument to failure” (PM Modi, 2015). Shifts toward asset creation and away from pure employment guarantee. eKYC and Aadhaar-linking introduced, creating access barriers for marginal workers.
Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, 2025 introduced by Rural Development Minister Shivraj Singh Chouhan. Lok Sabha passed on December 18, 2025; Rajya Sabha followed. Framed as alignment with Viksit Bharat @2047 vision — moving from mere employment guarantee to integrated rural livelihoods and durable asset creation.
President Droupadi Murmu gave assent to the VB-G RAM G Act, 2025. Described by Ministry of Rural Development as a “significant milestone in the transformation of rural employment policy”. SBI Research report predicted states would be net gainers of ₹17,000 crore compared to 7-year MGNREGA average.
Centre issued Gazette notification formally declaring MGNREGA and all its rules, notifications, schemes, and guidelines repealed from July 1, 2026. Transitional provisions to ensure MGNREGA eKYC job card holders are seamlessly absorbed.
Ministry of Rural Development released 8 draft rules — covering National Level Steering Committee (NLSC), Grievance Redressal, Administrative Expenses, Transitional Provisions, Normative Allocation parameters, Central Gramin Rozgar Guarantee Council, Wage Payment Manner, and Expenditure for UTs without Legislature. Public comments invited for 30 days before final notification.
- Right-based law — guaranteed 100 days of unskilled manual work per rural household per year; work must be provided within 15 days or unemployment allowance paid
- Demand-driven — household applies for work; state has no choice but to provide; supply cannot be capped by government intent
- 100% Central funding for wages; states bear unemployment allowance and admin costs (~6%)
- Works selected by Gram Panchayat — at least 50% of works mandated to be executed by GPs (not contractors)
- Social audit — mandatory social audit by independent State Social Audit Units (SSAUs); one of India’s strongest transparency mechanisms
- Covers Schedule I permissible works: water conservation, flood protection, drought proofing, land development, rural connectivity
- Women must constitute at least 1/3 of workers in every gram panchayat
- Asset quality concerns — critics argued many MGNREGA assets (earthen bunds, ponds) were of poor durability; no convergence with PM Gati Shakti or larger infrastructure plans
- Wage delays — systemic delays of 3–9 months in wage payments despite legal 15-day mandate; adversely affected poor workers most
- Demand-supply mismatch — government often underfunded relative to demand; workers entitled to 100 days often got 40–50 days due to fund exhaustion
- Urban bias in design — not available to urban informal workers; rural-urban migration made the scheme’s rural-only scope increasingly anachronistic
- eKYC exclusions — 45.4% of 255M workers (LibTech India) had not completed eKYC by 2025–26 due to technological barriers — creating de facto exclusion from the scheme
- Contractor-driven works — despite GP mandate, contractors dominated many states, leading to corruption and ghost workers
| Parameter | MGNREGA (2005) | VB-G RAM G (2025) |
|---|---|---|
| Guaranteed Days | 100 days per rural household per year | 125 days per rural household per year — 25% increase |
| Central Funding | 100% Centre bears wage costs | 60:40 Centre:State (general); 90:10 for NE/Himalayan states — significant fiscal shift to states |
| Demand vs Supply | Demand-driven — right to apply for work; state legally obligated | Normative allocation model — Centre determines state allocations based on 16th Finance Commission formula and performance parameters |
| Planning Framework | Gram Panchayat selects works; limited to Schedule I permissible works | 4 thematic domains: water security, rural infrastructure, livelihood infrastructure, extreme weather mitigation. Integrated with PM Gati Shakti National Master Plan |
| Agricultural Pause | No provision for pausing employment during farm season | 60-day pause permissible during sowing/harvesting to ensure farm labour availability — addresses chronic rural labour shortage complaints |
| Wage Payment | Via bank/post office; delays systemic | Mandatory DBT (Direct Benefit Transfer) to bank/post office; penalties for delays more explicitly codified |
| Job Card | MGNREGA Job Card | Gramin Rozgar Guarantee Card — existing eKYC-verified MGNREGA cards valid during transition |
| Oversight Body | Central Employment Guarantee Council | National Level Steering Committee (NLSC) + Central Gramin Rozgar Guarantee Council — includes representation from workers’ organisations, SC/ST, persons with disabilities |
| Technology | NMMs (National Mobile Monitoring System), SECURE app | Face authentication + AI-enabled monitoring; eKYC mandatory for job card; Viksit Gram Panchayat Plans integrated with national dashboard |
| Admin Expenditure | Capped at 6% of state allocation | Raised to 9% — enabling better functionary payment and service conditions |
Constitutes the NLSC to provide high-level oversight and recommend normative fund allocations to states. Composition to be specified in final rules.
Establishes a multi-tier complaint mechanism for workers — from GP level to Central level — with defined timelines for resolution.
Raises admin expenditure ceiling from 6% to 9% — enables states to pay functionaries, conduct training, and operate monitoring systems.
Most significant for existing workers — eKYC-verified MGNREGA job cards remain valid until Gramin Rozgar Guarantee Cards issued. Ongoing works continue; pending wages settled under old scheme.
Centre determines state allocations using 16th Finance Commission formula + performance indicators: timely wage payment, social audit compliance, work completion rate.
Includes 15 non-official members from PRI, workers’ organisations, SC/ST, minorities, and persons with disabilities — broader than MGNREGA’s Council.
Mandates payment via DBT to bank/post office accounts; defines unemployment allowance amounts and payment timelines when work is not provided within 15 days.
Governs expenditure incurred by states beyond normative allocation; separate provisions for UTs without Legislatures where Centre directly implements the scheme.
- The 16th Finance Commission horizontal devolution formula may disadvantage states that relied heavily on MGNREGA’s demand-driven model
- Tamil Nadu, Andhra Pradesh, Rajasthan, Maharashtra — may receive lower VB-G RAM G allocations than their 2025–26 MGNREGA share, as the new formula weights population and performance differently
- States with high MGNREGA demand but lower performance scores (timely payment, social audit compliance) face a double disadvantage — lower base allocation AND performance deductions
- The 60:40 Centre:State funding split creates new fiscal pressure for states with tight budgets — particularly states that already have high social sector spending
- Uttar Pradesh, Gujarat, Madhya Pradesh, Assam, Haryana, Punjab, Bihar — projected to receive higher VB-G RAM G allocations under the new formula
- States with better performance metrics (prompt wage payment, social audit completion, work completion rate) receive larger performance-based share of normative allocation
- NE and Himalayan states retain favourable 90:10 Centre:State ratio — insulated from the fiscal shift that general states face
- SBI Research report projected most states would be net gainers of ₹17,000 crore compared to 7-year MGNREGA average — though critics dispute this aggregate figure’s distribution
| Dimension | MGNREGA Approach | VB-G RAM G Shift |
|---|---|---|
| Fiscal Architecture | Centre bears 100% wage cost — states have no financial disincentive to generate demand; no fiscal accountability for efficiency | 60:40 cost-sharing — states now have skin in the game; incentivised to ensure genuine demand and efficient implementation; but risk underfunding by fiscally stressed states |
| Fund Allocation Model | Demand-driven — Centre allocates based on actual worker demand reported by states; responsive to economic shocks | Normative/supply-side — Centre determines allocation using FC formula + performance; risk that allocation may not match actual rural distress in drought/flood years |
| Performance Conditionality | Weak performance linkages; no formal penalty for poor implementation | Strong performance conditionality — timely wage payment, social audit compliance, work completion rate determine a portion of normative allocation; creates incentives and risks of gaming |
| Planning Integration | GP-level plans; isolated from national infrastructure planning | Integration with PM Gati Shakti NMP — works linked to 4 thematic domains aligned with national development goals; aims at durable asset creation |
| Women’s Participation | Mandatory 1/3 women workers per GP | Retains women’s participation norms; Ajeevika (livelihoods) component adds skill-linked income generation alongside wage employment |
| Social Audit | Mandatory social audit by independent SSAUs — one of India’s strongest accountability frameworks | Social audit compliance is now a performance parameter affecting allocation — creates strong incentive for states to conduct audits, though risk of tokenism if audit process itself is not strengthened |
- 125-day guarantee is a genuine improvement — 25% more employment security for rural households facing increasing climate and economic shocks
- Asset quality improvement — thematic focus on water security, rural infrastructure, and extreme weather mitigation creates more durable and productive rural assets than many MGNREGA earthworks
- DBT mandate addresses chronic wage delay problem — direct bank transfer with penalties for delay provides stronger worker protection than MGNREGA’s often flouted 15-day rule
- Integration with PM Gati Shakti and national planning prevents the fragmented, uncoordinated asset creation that characterised MGNREGA works in many states
- Ajeevika component — moving beyond mere wage employment toward livelihood creation addresses structural rural poverty more comprehensively
- Dismantling a rights-based framework — MGNREGA was a legal right (demand-driven); VB-G RAM G is supply-side; workers can no longer legally demand work — the state decides allocation based on a formula, not household need
- Fiscal burden on states — 60:40 sharing means poor states (Bihar, UP, MP) which have the highest rural distress must now co-fund — risking underfunding precisely where the need is greatest
- eKYC exclusion risk — 115.8 million workers (45.4%) lack eKYC; if transitional provisions are not robustly implemented, crores of India’s most marginalised workers could be locked out from July 1
- 60-day agricultural pause — could be misused by state governments or local authorities to suppress employment demand during peak distress migration periods when workers most need the scheme
- Normative allocation opacity — the 16th Finance Commission formula-based allocation mechanism is not yet publicly available; no independent assessment of whether it adequately captures rural distress
- Urgent eKYC completion drive: Before July 1, 2026, MoRD must mount a saturation eKYC camp campaign in every gram panchayat — deploying Common Service Centres, banking correspondents, and ASHA workers to ensure no existing MGNREGA worker is excluded from the transition due to technological barriers.
- Retain demand-driven element for crisis: A supplementary demand-trigger clause must be built into the normative allocation framework — automatically releasing additional Centre funds when a district is declared drought/flood affected, preserving MGNREGA’s most valuable feature as an economic safety net during shocks.
- Transparent normative allocation formula: The Objective Parameters for Normative Allocation Rules must be publicly notified and independently assessed before July 1 — states and civil society must be able to verify that allocations adequately reflect actual rural labour demand, not just administrative performance scores.
- Strengthen social audit independence: While social audit compliance is now a performance indicator, the State Social Audit Units (SSAUs) must be structurally independent from the line ministry — funding SSAUs directly through Finance Commissions rather than through state Rural Development budgets which they are meant to audit.
- Safeguard women workers: With the 60-day agricultural pause risking gaps in employment for women with no alternative income, dedicated SHG-linked skill and livelihood activities under the Ajeevika component must be activated during pause periods so women’s income continuity is maintained.
- Harmonise with PMGSY & PMAY: The thematic 4-domain framework for VB-G RAM G works must be formally converged with PM Grameen Sadak Yojana, PM Awas Yojana–Gramin, and AMRUT Rural — avoiding duplication of planning while maximising the durable asset creation potential of 125 guaranteed workdays per household annually.
“The VB-G RAM G Act, 2025 replaces MGNREGA’s rights-based demand-driven architecture with a performance-linked supply-side model — a paradigm shift with significant implications for rural poor, Centre-State fiscal relations, and India’s social protection framework.” Critically examine the key changes introduced by VB-G RAM G, the challenges in transition, and the governance reforms necessary to ensure that the most marginalised rural workers are not excluded from the new scheme.
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