From Guarantee to Budgetary Token: India’s Rural Employment Act is Not Being Reformed—It’s Being Revoked.
Abstract
The proposed Viksit Bharat Guarantee for Rozgar and Ajeevika Mission Gramin (VB-G RAM G) Bill, 2025 seeks to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005—India’s most significant rights-based rural employment legislation. This paper critically examines the proposed overhaul, arguing that it fundamentally dilutes the statutory right to work by transforming a demand-driven, 100 per cent centrally funded entitlement into a budget-capped, centrally sponsored scheme with a 60:40 Centre–State funding model. Through a constitutional, fiscal, and labour-market lens, the analysis highlights how normative allocations, compulsory seasonal exclusion, wage restructuring, and increased financial liability on states collectively weaken livelihood security for rural households. The paper concludes that the proposed Bill represents not reform but retrenchment, undermining decentralisation, fiscal federalism, and the dignity-based framework that defined MGNREGA.
Not Just a Name Change, but a Structural Rupture
The proposed Viksit Bharat Guarantee for Rozgar and Ajeevika Mission Gramin (VB-G RAM G) Bill, 2025 seeks to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005—India’s most expansive rights-based social security legislation.
While the government presents this move as a “modernisation” aligned with Viksit Bharat@2047, the proposed Bill fundamentally alters the legal character, fiscal responsibility, and decentralised ethos of the original Act. The debate, therefore, is not merely about erasing Mahatma Gandhi’s name, but about dismantling the statutory right to work and converting it into a budget-capped, centrally managed scheme.
MGNREGA was not a welfare programme—it was a legal entitlement. VB-G RAM G, by contrast, risks becoming a conditional assurance, dependent on fiscal ceilings, state co-financing capacity, and centrally defined norms.
I. MGNREGA: The Historical Culmination of Rural Employment Policy
India’s rural employment framework evolved over decades—from relief-oriented programmes to a rights-based statute.
Evolution of Rural Employment Schemes
Era | Scheme | Key Feature |
1960s–70s | RMP, CSRE, FWP | Ad-hoc relief programmes |
1980s | NREP, RLEGP | Structured employment, landless focus |
1989 | Jawahar Rozgar Yojana | PRI-led decentralisation |
1993 | Employment Assurance Scheme | Lean-season employment |
2001 | Sampoorna Gramin Rozgar Yojana | Convergence of food & work |
2005 | MGNREGA | Legal right to work, demand-driven, 100% central wage funding |
MGNREGA marked a paradigm shift—from discretionary welfare to justiciable entitlement, enforceable through unemployment allowance.
II. Core Architecture of MGNREGA: A Rights-Based Law
MGNREGA was rooted in constitutional intent:
Article 21: Right to life with dignity
Article 40 & 73rd Amendment: Decentralisation via Gram Panchayats
Article 46: Social justice for SCs, STs, women
Key Legal Guarantees
Demand-driven employment
Work within 15 days of application
Unemployment allowance if work denied
100% Central funding of unskilled wages
Mandatory social audits
This structure insulated the poor from fiscal discretion and political negotiation.
III. What the VB-G RAM G Bill Changes: From Entitlement to Allocation
Structural Comparison
Feature | MGNREGA | VB-G RAM G Bill | Critical Implication |
Legal Nature | Rights-based Act | Centrally Sponsored Scheme | Right converted into scheme |
Funding | 100% Central (wages) | 60:40 Centre-State | States shoulder fiscal burden |
Allocation | Demand-driven | Normative, capped | Centre’s liability limited |
Work Days | 100 days | 125 days | Promise without guarantee |
Seasonal Work | No exclusion | Mandatory 60-day pause | Legal deprivation of work |
Planning | GP-led | Centrally aligned infrastructure | Centralisation |
The shift to normative allocation is the most damaging change—it removes the Centre’s legal obligation to fund demand.
IV. Fiscal Federalism Undermined: The 60:40 Funding Trap
The reduction of the Centre’s share from near-total wage funding to 60% effectively re-federalises poverty risk.
Consequences
States may cap work artificially
Poorer and high-wage states face fiscal stress
Centre gains discretionary power over allocation
State Reactions
Kerala: ₹2,000–2,500 crore additional annual burden
Tamil Nadu: Punishment for successful poverty reduction
Telangana: Unfair fiscal offloading
TDP (NDA ally): Loss of scheme’s unique guarantee
Haryana’s Dilemma
Haryana pays the highest MGNREGA wage (₹331). Funding 40% of wages for 125 days is fiscally unsustainable, risking work rationing.
V. Wage Paradox: The Illusion of a Hike
Proposed Wage vs Existing Wages
State | Current Wage (₹) | Proposed (₹240) | Impact |
Haryana | 331 | 240 | Sharp reduction |
Kerala | 311 | 240 | Lower |
Goa | 315 | 240 | Much lower |
Karnataka | 309 | 240 | Lower |
Rajasthan | 231 | 240 | Slight increase |
A uniform ₹240 floor reduces real wages in progressive states and weakens MGNREGA’s role in raising rural wage floors.
VI. Seasonal Exclusion: Institutionalising Unemployment
The mandatory 60-day ‘no work’ period reverses MGNREGA’s safety-net logic.
Landless labourers rely on MGNREGA during agricultural peaks
Women and tribals lose supplementary income
Labour discipline is restored in favour of landowners
This is not convergence—it is labour market intervention against workers.
VII. Technology as Control, Not Empowerment
While corruption exists, technological absolutism creates new exclusions:
Poor connectivity
Delayed payments
Algorithmic opacity
CAG’s critique focused on capacity deficits, not excess decentralisation. Central tech solutions cannot substitute institutional strengthening.
VIII. Unemployment Data: The Misleading Comfort of Low Numbers
Unemployment Rate (15+)
Period | UR |
Nov 2025 | 4.7% |
Rural | 3.9% |
Urban | 6.5% |
Low rural unemployment often reflects disguised employment, not job security. MGNREGA’s relevance lies in income smoothing, not headline UR figures.
IX. PM Modi’s 2015 Statement: From Monument to Dismantling
In 2015, the Prime Minister called MGNREGA a “living monument” of UPA failure—yet retained it. Replacing the Act entirely signals an ideological shift away from rights-based welfare toward outcome-driven, centrally controlled development.
Conclusion: Dilution, Not Reform
The VB-G RAM G Bill does not merely reform MGNREGA—it redefines it out of existence.
A legal right becomes a budget-bounded scheme
The Centre retreats from constitutional responsibility
States inherit fiscal risk without commensurate autonomy
Workers lose enforceability, predictability, and dignity
India does not need fewer guarantees—it needs stronger implementation, better audits, timely payments, and expanded opportunities. The solution to governance failure is correction, not conversion.
The real debate must move beyond nomenclature and confront the truth:
VB-G RAM G weakens the very foundation that made MGNREGA historic.
Strengthening MGNREGA, not dismantling it, is the true test of commitment to inclusive growth and constitutional justice.
References
1. Government of India. The Mahatma Gandhi National Rural Employment Guarantee Act, 2005. Ministry of Law and Justice.
2. Ministry of Rural Development (MoRD). MGNREGA Operational Guidelines (various years).
3. Comptroller and Auditor General of India. Performance Audit of MGNREGA (2007–2012).
4. Ministry of Statistics and Programme Implementation (MoSPI). Periodic Labour Force Survey (PLFS), November 2025.
5. Dreze, J., & Khera, R. (2010). The Battle for Employment Guarantee. Oxford University Press.
6. Ministry of Finance. Expenditure Profile and Centrally Sponsored Schemes Framework. Government of India.
7. Planning Commission / NITI Aayog. Evaluation Studies on MGNREGA.
8. Supreme Court of India. People’s Union for Civil Liberties vs Union of India (Right to Food and work-related jurisprudence).
9. Government of India. Viksit Bharat@2047 Vision Documents.
10. Modi, N. (2015). Lok Sabha Debate on MGNREGA, Budget Session.
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