Chennai: Amid apprehensions over the quantum of funds Tamil Nadu will receive under the VBG RAMG scheme, the Union government has allocated Rs 7,585 crore to the state, which is only Rs 120 crore less than last year.
Interim Allocation by Union Government
Union Rural Development Minister Shivraj Singh Chouhan stated that this interim allocation was made to ensure that states are not adversely affected and to facilitate the smooth implementation of the scheme. Since the draft rules to frame parameters as per the 16th Finance Commission for fund allocation are yet to be finalized, the Union Ministry of Rural Development has released the sum. Officials indicated that if the draft rules are implemented, the state may face a steep reduction in Union government fund allocations.
Revised Funding Pattern
However, Tamil Nadu will have to set aside an additional Rs 4,000 crore from its own coffers to implement the scheme, as the funding pattern under the provisions of the VBGRAMG Act 2025 has been revised. While MGNREGS mandated a 90:10 ratio between Union and state government fund allocations, the new Act specifies a 60:40 ratio.
A state government officer said, “TN was allocating around Rs 1,000 crore for the scheme, which must be increased to Rs 5,000 crore from the coming year.” As a result, the total outlay for VBGRAMG in Tamil Nadu would rise to Rs 12,642 crore.
A senior officer added, “Tamil Nadu has to contribute Rs 5,056 crore as a matching grant for the Centre’s contribution of Rs 7,585 crore. Otherwise, the state cannot utilise the funds to keep the scheme running.”
Fund Release Mechanism
Funds from the Centre will be released in tranches. Every time a tranche is released, the state must simultaneously release its share. Any delay could affect the pace of implementation. The officer noted, “TN’s share towards the scheme all these years was around Rs 1,000 crore.”
