The Narendra Modi government's move to replace the landmark Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with a new legislation has significant political and fiscal implications. The proposed Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission Grameen (VB-G RAM G) Bill aims to reshape India's rural employment safety net, but its design has sparked concerns over fiscal federalism.
Key Provisions and Potential Improvements
The VB-G RAM G Bill, introduced on December 16, 2025, proposes to increase guaranteed wage employment from 100 days to 125 days per financial year for rural households. This enhancement is a clear upgrade from the previous UPA-era scheme. The bill also introduces sensible curbs, preventing work during a notified 60-day peak agricultural season to avoid disrupting farming cycles.
Furthermore, the integration of technology for transparency is a welcome step. The proposed use of biometric authentication, GPS tracking, mobile-based worksite monitoring, and AI for fraud detection builds on the digital governance model. The Modi government's management of MGNREGA during the pandemic, generating a record 389 crore person-days in 2020-21 and 364 crore in 2021-22, demonstrates the scheme's critical role as a lifeline during crises.
The Core Problem: A Flawed Fiscal Architecture
However, the bill's fundamental flaw lies in its fiscal design. The existing MGNREGA framework mandates the Centre to bear the entire cost of wages and 75% of material costs. The VB-G RAM G Bill dramatically alters this by proposing a 60:40 fund-sharing pattern between the Centre and states. Only the North-east and Himalayan states will receive a more favourable 90% central funding.
This shift imposes a substantial burden on state governments, many of which are already in a tight fiscal position with limited revenue-raising powers. Experts fear this could lead to a situation akin to the Pradhan Mantri Fasal Bima Yojana (PMFBY), where delayed premium subsidy payments by states have hampered the scheme's effectiveness. For a flagship national social security program, especially crucial in fiscally weak states, a greater central funding commitment is considered essential.
A Top-Down Approach Replaces Grassroots Planning
The fiscal burden is not the only concern. The new bill also alters the planning philosophy of the scheme. MGNREGA followed a bottom-up approach, where states would assess local work demand and submit labour budgets to the Centre, which then allocated funds accordingly.
The VB-G RAM G Bill flips this model. It empowers the Centre to provide a "normative" allocation based on parameters it decides unilaterally. This top-down shift is viewed as a misstep, potentially disconnecting fund allocation from actual, on-ground demand and reducing the flexibility of states to respond to local employment needs.
While reforming MGNREGA to improve efficiency and targetability is necessary, the VB-G RAM G Bill, in its current form, risks fraying the social safety net it seeks to modernize. The success of this critical transition will hinge on addressing the asymmetric fiscal burden on states and reinstating a more collaborative planning mechanism.
