Nobel Laureate Raises Alarm Over Proposed G Ram G Bill's Impact on Poorer States
During the third day of the Hyderabad Literary Festival, Nobel Prize-winning economist Abhijit Banerjee voiced significant concerns regarding the proposed Viksit Bharat—Guarantee for Rozgar and Aajeevika Mission (Gramin), commonly referred to as the G Ram G Bill. The eminent scholar cautioned that a declining share of federal funding under this legislation could disproportionately and adversely affect states that are already economically vulnerable.
Potential Consequences for Economically Weaker States
Banerjee emphasized that states with existing financial challenges would face severe repercussions if central government support is reduced or inadequately provided to those implementing the scheme on the ground. "There are states which are already poor. If the govt cuts federal funding or does not adequately support those implementing the scheme on the ground, it will have a serious impact even on those who execute it on the ground. Poorer states will receive even less funding and will suffer," he stated during his discussion at the festival, which centered around his latest publication, 'Chhaunk: On Food, Economics and Society'.
The economist highlighted that such a move could further weaken welfare mechanisms in regions that are already struggling, potentially exacerbating economic disparities across the country.
Premature to Draw Definitive Conclusions
Despite his concerns, Banerjee noted that it is currently too early to take a definitive stand on the proposed bill. He pointed out that the modalities of the legislation have not yet been finalized, and it remains a proposal rather than enacted law. "It is not yet a law. There is considerable disagreement, including within the ruling party. It would be premature to treat the proposal as final, as there remains space for negotiation as the political process unfolds," he explained, suggesting a notable lack of clarity and consensus surrounding the proposed changes.
Key Provisions of the G Ram G Bill
The G Ram G Bill, introduced in December 2025, proposes to replace the longstanding Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) of 2005. This represents a significant shift in rural employment and welfare policy. Under the current MGNREGA framework:
- The central government bears 100% of the wages for workers.
- It also covers 75% of the material costs associated with projects.
The proposed amendment would transition to a 60:40 central-state funding model, fundamentally altering the financial responsibilities between the Union and state governments. Additionally, the bill aims to:
- Increase guaranteed rural employment from 100 to 125 days per household annually.
- Integrate job creation efforts with critical infrastructure development projects focusing on areas such as water conservation, connectivity improvements, and climate resilience initiatives.
Existing Challenges in MGNREGA Implementation
Banerjee also drew attention to persistent issues within the current MGNREGA system, particularly concerning inequality in access to employment opportunities across different states. "There is a lot of inequality in who gets MNREGA work. That weakens its ability to function as a safety provider," he remarked, underscoring how the scheme's effectiveness is heavily dependent on efficient and equitable execution at the grassroots level.
He further expressed uncertainty about the scheme's current success rate, noting that "on-ground implementation continues to be an issue." These implementation challenges raise important questions about how the proposed G Ram G Bill would address or potentially compound these existing problems, especially in states with weaker administrative capacities.
The discussion at the Hyderabad Literary Festival has brought to light critical considerations about federalism, welfare economics, and regional equity as India contemplates this substantial policy shift in rural employment guarantees.
