Decoding the new rural employment scheme

Government of India has recently proposed to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), 2005, with the “Viksit Bharat—Guarantee For Rozgar And Ajeevika Mission (Gramin)” Bill (VB—G Ram G). In this post, Ashwini Kulkarni argues that while the new scheme offers an increase in available workdays, it simultaneously dilutes the financial participation of the Centre, restricts the period of work availability, and centralises planning.

The proposed Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB—G RAM G) Act, 2025 presents itself as a successor to the landmark Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA)¹, 2005. The new Act appears to maintain most of the framework, with much of the original Act’s text either directly copy-pasted or paraphrased. However, a closer reading reveals significant structural shifts. While there are enhancements in the duration of employment, the proposed changes to funding, coverage, and the nature of work suggest a pivot from a demand-driven welfare “guarantee” toward a centralised, infrastructure-focused framework.

The most visible change is that the number of workdays per household has been raised from 100 to 125 days in a year for a household. However, this expansion comes with a significant caveat regarding the continuity of work. Unlike the 2005 Act, which did not mandate work stoppages, the new framework introduces a suspension of works for 60 days during sowing and harvesting periods. While the specific dates are to be decided by the state government, this clause introduces a mandatory pause in the guarantee. 

Further comes the shock of change in funding pattern. MNREGA was designed with the central government bearing 100% of the unskilled labour wage cost, which is fundamental to provide ‘guarantee’. Of the material, machine, and skilled labour costs, the central government took responsibility of 75%, and also contributed 6% in terms of administrative costs. The new proposal fundamentally alters this ratio. The central government will now provide only 60% of the total fund requirement (unskilled labour, material, machine, and skilled labour), with the state government covering the remaining 40%.

Moreover, the amount of funding for each state is to be determined by the central government on the basis of “normative allocation” involving “objective parameters”. If the total fund requirement of a state and the areas to be considered are to be framed by the central government, and only 60% of that amount is to be provided, this is clearly moving away from a purely demand-driven model.

A few years back, the rural housing scheme was ‘merged’ with MNREGA, such that the labour component of its works would fall under MNREGA. Later, in a similar fashion, building toilets and soak pits was brought under MNREGA. While earlier a worker had the choice of MNREGA and other such projects taking place in the village, the combining of schemes effectively reduced the total labour days of public work. This would be worsened by the shrinking of central government financial support for the rural employment programme. 

A fundamental pillar of MNREGA (post-2008) was its universal application across all of rural India. Here, the new gets hazy. We will need to wait for the rules to be stated for a complete understanding. At present, it says that it will apply only to rural areas specifically notified by the central government. This raises a critical question regarding federalism and social security: If an area is not notified by the central government, does the burden of employment generation fall entirely on the state government?

The planning mechanism is undergoing a shift from local autonomy to national alignment. Under MNREGA, 2005, the “Labour Budget” was a bottom-up process prepared by villagers and ratified by the Gram Sabha – the only criteria being that it adheres to the list of permissible works as stated from time to time in the guidelines. The new Act replaces this with “Viksit Gram Panchayat Plans”, prepared at the block and district levels. While there is still provision for participation of the villagers, their suggestions are to be aggregated and not necessarily accepted. Further, these plans will need to be integrated into the Viksit Bharat National Rural Infrastructure Stack (VBRIS). This system is anchored to “national priorities” and integrated with the PM Gati Shakti National Master Plan. There are four themes mentioned as guiding principles for the type of projects to be undertaken as per the new Act. These focus heavily on construction projects, like panchayat bhavans, school buildings, hospitals, canal construction, and so on, which require more of material, machine and skilled labour. 

The new Act makes the use of digital technology – for attendance and geo-tagging – almost mandatory at every level of implementation. While MNREGA utilised a robust website, the greater emphasis on digital systems in the new Act raises concerns for areas with weak digital infrastructure. Experience has shown that local governments often discourage works in areas with poor connectivity to avoid administrative hurdles, potentially excluding the most marginalised regions.

The VB—G RAM G Act, 2025 represents a complex evolution of India’s rural employment landscape. While it offers a higher cap on workdays, it simultaneously dilutes the financial participation of the Centre, restricts the period of work availability, and centralises planning. The shift from a Gram Sabha-led “Labour Budget” to a National Infrastructure Stack suggests that the primary objective may be moving from social security with relevant infrastructure as planned by the community, to asset creation as in the national master plan.

The views expressed in this post are solely those of the author, and do not necessarily reflect those of the I4I Editorial Board.

Note:

1. MNREGA is a legal guarantee of employment on demand to all adults in rural India up to 100 days of work per household per year.