HYDERABAD: Nobel Laureate and renowned economist Abhijit Banerjee voiced significant apprehension on Monday regarding the proposed G Ram G Bill, cautioning that a reduction in federal funding shares could disproportionately harm economically disadvantaged states across India.
Funding Shift Raises Alarms for Vulnerable States
Speaking during the concluding session of the Hyderabad Literary Festival (HLF), Banerjee emphasized that such a move could substantially weaken welfare mechanisms in states already grappling with financial constraints and economic vulnerability. He highlighted that diminished central support would place additional strain on state budgets, potentially compromising essential social safety nets.
Existing Inequalities in MNREGA Access
Banerjee drew attention to the pronounced inequality in access to Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) jobs across different states, noting that this disparity already undermines the program's effectiveness as a crucial social safety provider. "There is substantial inequality in who receives MNREGA work opportunities," he stated. "This existing imbalance weakens its capacity to function as a reliable safety net for vulnerable populations."
The economist elaborated that states with pre-existing economic challenges would face compounded difficulties if federal funding is curtailed or if adequate support for ground-level implementation is lacking. "States that are already economically poor will likely receive even less funding under such arrangements, leading to severe consequences for both beneficiaries and those executing the schemes on the ground," Banerjee added.
Understanding the G Ram G Bill Provisions
Introduced in December 2025, the G Ram G Bill proposes to replace the MNREGA scheme launched in 2005. Key provisions include increasing guaranteed rural employment from 100 to 125 days per household annually and integrating job creation with infrastructure development projects focused on water conservation, connectivity enhancement, and climate resilience measures.
Funding Model Changes and Implementation Concerns
A significant aspect of the bill is the shift to a 60:40 central-state funding model, which has raised concerns about increased financial burdens on state governments. Banerjee noted that while the bill aims to expand employment guarantees, its success hinges on proper funding allocation and efficient implementation mechanisms.
However, the Nobel Laureate maintained that it is premature to adopt a definitive stance on the legislation, as its operational modalities remain unfinalized. He pointed to apparent pushback even within the ruling party, suggesting ongoing debates and a lack of clear consensus surrounding the proposed changes.
Ground-Level Implementation Challenges
When questioned about MNREGA fund utilization, Banerjee acknowledged that implementation at the grassroots level continues to present major challenges. He emphasized that while MNREGA is designed as a robust support system, its actual effectiveness depends heavily on efficient execution and administrative capacity.
"I remain uncertain about MNREGA's current success rate because ground-level implementation persists as a significant issue," Banerjee remarked, underscoring the need for improved administrative frameworks and monitoring systems to ensure program effectiveness.
The economist's comments highlight broader concerns about social welfare program design, funding mechanisms, and implementation efficiency in India's federal structure, particularly as new legislation seeks to transform rural employment guarantees.
