MGNREGA To VB-G RAM G: Reform and Not Demolition.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was instituted in 2005 as a legally enforceable right to work for the rural households, guaranteeing 100 days of unskilled manual employment every year. It was designed to provide income security, strengthen rural infrastructure, and reduce distress migration, respectively. Over two decades, it became one of the most heavily scrutinised and extensively studied social programmes in the world, with assets such as water harvesting structures, roads and soil conservation works created across rural India. 

Despite its well-intentioned design and historical significance, recent years have revealed persistent challenges in implementation, utilisation, and outcomes. These issues prompted a comprehensive policy reassessment by the current government. The Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (VB-G RAM G), which was introduced in Lok Sabha on December 16, 2025, marks a structural shift in India’s rural employment framework. This is an attempt to modernise and recalibrate rural employment policy in line with evolving socio-economic realities. 

Why Reform Was Considered Necessary 

When the MGNREGA was enacted in 2005, the rural poverty rates exceeded 25%. By the FY 2023–24, from a State Bank of India (SBI) research report that uses the Household Consumption Expenditure Survey (HCES) indicated that poverty had declined to 4.86%, down from 25.7% in 2011-12, contributed to by rising rural incomes, expanded financial inclusion, and diversification of livelihoods. 

Despite the sharp decline in poverty, rural incomes remain uneven, with many households earning just above the poverty line. Seasonal unemployment persists, especially among women and youth, and agriculture’s share in rural employment has fallen to roughly 41%, while non‑farm work is often informal and low‑paying (NSO, 2023). 

MGNREGA’s performance improved significantly between 2014 and 2025, with persons‑days of employment rising by about 82% compared to the decade before 2014, reflecting increased budgetary allocations, digital payments, and asset creation under the Act. In FY 2024–25, nearly 16 crore households benefited, and women’s participation climbed to approximately 58%. However, many households still receive less than the guaranteed 100 days of work in practice, showing that while MGNREGA ensures basic income, it cannot fully address livelihood diversification, skill gaps, and long‑term economic resilience, necessitating policy updates. The rural economy of 2025 differs substantially from that of 2005 in terms of labour mobility, agricultural practices, and non-farm employment opportunities.

This evolution formed the core rationale for revisiting the legal framework governing rural employment. Policymakers argued that a scheme designed primarily as a rights-based safety net needed recalibration to address contemporary rural challenges, balancing employment security with productive asset creation. These gaps show that while MGNREGA ensures basic income, it cannot fully address livelihood diversification & sustainability, skill gaps, and long-term economic resilience, necessitating policy updates.

Structural Shift Under VB-G RAM G: What the New Law Changes?

The Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (VB-G RAM G) was passed by Parliament & assented to by the President on December 18, 2025. It formally replaces the 2005 MGNREGA framework. The Union Agriculture and Rural Development Minister Shivraj Singh Chouhan described this legislation as a “game-changer” that will “transform rural India” and enhance livelihood security for both labourers and farmers alike, asserting that it is “far better” than the 2005 MGNREGA framework 

A key statutory change is the expansion of the guaranteed employment statutory number of guaranteed days of employment from 100 to 125 days per rural household annually, representing a 25% increase in guaranteed work & legal entitlement. Unlike the earlier formulation, where “not less than 100 days” often functioned as a practical ceiling, the revised provision explicitly raises the employment floor. 

Government reporting where confirms that because in the recent years the average MGNREGA employment offered per household was well below 100 days despite the headline guarantee - a disparity that the new 125-day provision seeks to address which is the Government figures show that in the years leading up to the reform the scheme’s implementation struggled to provide even half of the promised employment days on average, with rural households receiving roughly 50 days of work annually,

Structurally, VB-G RAM G shifts from a purely demand-driven statute to a more planned, normative allocation, supply-based outcome-oriented framework, integrating employment generation with broader infrastructure, livelihood, and climate resilience goals aligned with the Viksit Bharat-2047 vision. Thereby, it is essential to distinguish between both well-intentioned reform and exaggerated claims about the destruction of rights and livelihoods. 

Right to Work, Funding Design and Implementation Realities

A central critique in Mrs Gandhi’s piece is that the VB-G RAM G law abolishes the right to work and fundamentally dismantles rural employment security. This interpretation misreads the provisions: the new law still mandates employment; if work was not provided in the statutory 15-day period, they were entitled to unemployment allowance, retaining a key protective measure. 

Concern that advance allocations weaken the employment guarantee and limit work often confuses budgeting with actual employment ceilings. MGNREGA being a demand-based model, any rural household with willing adult workers could demand work, and the Union government had to provide additional funds if demand exceeded the initial budget limit. The new supply-based approach, with advance allocations & tighter planning, aims to improve predictability but has raised worries about reduced access, among critics. 

However, even under the earlier open-ended funding system, actual delivery remained unpredictable, as routine payment delays and administrative bottlenecks disrupted implementation across states, as documented in government statements and field reports. Official data from the Ministry of Rural Development data for 2025 records over 106 crore person-days of employment generated, along with improvements in digital payment systems intended to speed up wage disbursements, although gaps continued.

Official monitoring data preceding the legislative overhaul documented multiple systemic weaknesses in MGNREGA’s implementation: 

1. The delayed wage liabilities include nearly ₹949 crore in unpaid delay compensation and large backlogs in processing such claims. 

2. Complex compliance procedures and technological glitches worsened these delays. 

3. Around 124 million person-days of delay compensation claims were rejected on technical grounds, weakening the scheme’s promise of timely payment. 

   
   

These systemic implementation failures limited rural labour participation and discouraged regular engagement with the programme, a reality acknowledged by both supporters and critics of reform as evidence that the 2005 framework had reached its operational limits.

Crisis Response and Digitisation, and Governance

MGNREGA has historically functioned as a critical safety net during economic crises. During the 2008 global slowdown and especially during the COVID-19 pandemic, the scheme absorbed large numbers of returning migrant workers. In 2020–21, over 389 crore person-days of employment were generated, the highest since inception, helping stabilise rural incomes.

At the same time, administrative and funding constraints continued to affect timely wage disbursement and access to work. While critics fear that planned allocations and seasonal pauses under the new framework may weaken crisis responsiveness, the government maintains that improved planning and advance fund releases will rather enhance reliability during future shocks.

The reformed framework continues and strengthens Direct Benefit Transfer (DBT) mechanisms. By FY 2024–25, over 99.99% of payments were electronic and Aadhaar-linked, significantly reducing wage theft and leakages. This digitisation reflects a long-term governance trend that began under MGNREGA itself.

While some proponents of VB-G RAM G describe the expansion of digital tools such as geotagging, biometric attendance, worksite validation, real-time payment tracking, and public dashboards as centralisation, this critique underestimates the extent to which India’s rural economy has already undergone deep digital transformation. The rural digital landscape of 2025 is no longer comparable to that of the early MGNREGA years. According to government data, over 99% of villages are now connected by mobile networks, more than 85% of rural households own a mobile phone, and over 90% of adult beneficiaries possess Aadhaar-linked bank accounts, following the success of the Pradhan Mantri Jan Dhan Yojana (PMJDY), Aadhaar saturation drives, and widespread mobile penetration (Department of Telecommunications; Ministry of Finance).

Direct Benefit Transfer (DBT) reforms have also fundamentally altered welfare delivery. Since 2014, DBT has enabled over ₹30 lakh crore to be transferred directly into beneficiary accounts across schemes, significantly reducing leakages, ghost beneficiaries, and payment delays (DBT Mission, Government of India). Flagship programmes such as PM-KISAN, LPG PAHAL, PM Awas Yojana, National Social Assistance Programme, and PM Ujjwala Yojana operate entirely through digital identification, authentication, and payments, with documented improvements in coverage, transparency, and fiscal efficiency. MGNREGA itself has already transitioned substantially to digital payments, with nearly 100% wage payments routed through DBT, demonstrating that digitisation is not an experimental shift but an established administrative norm.

Between 2013 and 2025, Aadhaar-seeded worker databases and electronic payments rose dramatically, reflecting sustained digital modernisation efforts that aimed at reducing leakages and ensuring accountability. 

Rather than disempowering local institutions, digital systems - when designed with adequate safeguards - can strengthen accountability by providing verifiable records of attendance, asset creation, and fund flows, thereby reducing discretion-based exclusion and corruption. Concerns regarding connectivity gaps and authentication failures remain valid in specific pockets, but these challenges increasingly reflect infrastructure deficits rather than flaws inherent to digitisation itself. Government initiatives such as BharatNet, offline attendance provisions, relaxed authentication protocols, and grievance redressal portals have been introduced precisely to mitigate such risks. Not only this, but in reality, these digital tools were introduced under MGNREGA itself over the past decade to enhance the transparency, reduce fraud, and even enable better monitoring of assets and payments. 

In this context, the digital intensification under VB-G RAM G represents not a departure from rural realities but an alignment with them. The policy challenge, therefore, lies not in rolling back digital governance but in closing residual connectivity gaps and strengthening last-mile support, respectively, ensuring that digitisation enhances inclusion while preserving the employment guarantee’s rights-based foundation.

Fiscal Federalism and Cost-Sharing Logic

A recurring narrative is that the funding pattern has changed from fully central funding to a burdensome 60:40 Centre-State cost share that will starve rural jobs. It is crucial to contextualise this. Under the MGNREGA design, the Centre historically paid the entire cost of unskilled wages and most of the material expenses, but this fiscal structure had become increasingly strained given the rising annual requirements. The new law institutes the cost sharing: for most states, it is 60% Centre and 40% State, while for Himalayan and North-East states, it remains 90:10, and Union Territories without a legislature receive 100% funding. This tiered approach reflects administrative equity rather than a uniform fiscal squeeze, and was explicitly part of the parliamentary design to balance national support with local ownership, respectively.

Seasonal Labour Alignment with Agriculture

Another point of contention has been the provision that allows a pause in scheme work for up to 60 days in peak sowing and harvesting seasons. This reform directly responds to longstanding farm sector complaints that MGNREGA work during critical agricultural periods strains rural labour availability. By legally codifying these seasonal pauses, the new framework aims to harmonise rural employment support with agricultural labour demands, which could actually benefit both farmers and landless labourers alike in high-season labour markets. This is a structured policy adjustment that is supported by agrarian economics.

From Relief to Productivity - Asset Creation and Climate Resilience

Beyond wage employment, VB-G RAM G prioritises four core sectors like - water security, core rural infrastructure, livelihood infrastructure and climate resilience ensuring that employment also generates durable community assets and which reflects an attempt to strengthen the economic value of MGNREGA-style works and embed them within broader national planning frameworks such as PM Gati-Shakti, with the aim of safeguarding both fiscal efficiency and tangible asset outcomes too.

Conclusion

While it is legitimate to debate the optimal shape of rural employment law and to ensure that implementation safeguards are robust, characterising the VB-G RAM G Act as a “bulldozed demolition” of MGNREGA misrepresents both the statutory text and empirical data. The law retains the core protections, expands statutory entitlements, and embeds reforms that aim at operational efficiency. As the public discourse continues, both the policymakers and civil society must focus on the implementation fidelity and inclusive access, rather than framing the reform as a binary of destruction versus preservation.

Framing VB-G RAM G as part of a long-term rural development vision of ‘Viksit Bharat 2047’, a strategic reorientation that goes beyond short-term job provision to include asset creation and livelihood linkages.

Now nearly twenty years later, Parliament replaced MGNREGA with the Viksit Bharat - G RAM G Act, 2025 to reflect major changes in rural India. Villages now have better electrification, roads, digital payments, DBT systems and more diversified livelihoods, so a wage-employment law designed for a low-capacity, cash-based system needed updating. Evidence from CAG audits and independent studies also showed design limits: utilisation was often lowest in the poorest states and districts, while better-off states absorbed more funds, weakening the self-targeting assumption. 

The new law shifts focus from short-term relief to productive rural employment by linking wage work to durable assets, water security, climate resilience and livelihood infrastructure. The law expands statutory entitlements, and improved digital monitoring, faster payments and clearer accountability reflect higher governance capacity. Overall, this is not a dilution of social protection but an evidence-based update aligned with today’s rural realities.