Employment Guarantee has slipped into Limbo

Why in News?

India’s transition from the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, to the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (VB-G RAM G) has coincided with a sharp fall in rural employment generation.

According to provisional data cited by economists, MGNREGA and VB-G RAM G together generated only 70 crore person-days during April-July 2026, compared with 128 crore and 119 crore during the corresponding periods of the previous two years (a decline of about 43% from their average). 

July 2026 alone recorded a year-on-year decline of more than 40%. The fall was particularly severe in poorer States such as Uttar Pradesh, Madhya Pradesh and Jharkhand.

What changed after VB-G RAM G?

Operational from July 1, 2026, the VB-G RAM G Act replaced MGNREGA and:

• Statutory employment guarantee: Increased from 100 to 125 days per rural household annually.
• Funding pattern: Unlike MGNREGA, VB-G RAM G is a Centrally Sponsored Scheme, with the Centre-State sharing generally at 60:40, and 90:10 for North-Eastern/Himalayan States and full central funding for eligible Union Territories.
• Budget: The Centre has allocated ₹95,692 crore for 2026-27; including States’ contribution, the programme outlay is expected to exceed ₹1.51 lakh crore.
• Wages: The minimum notified wage has been raised to ₹300/day, with a national average of about ₹327.4/day, an increase of over 10%.
• Provides for a 60-day suspension of public works during peak agricultural seasons to ensure farm-labour availability.
• Emphasises digital attendance, Direct Benefit Transfer, real-time monitoring and Panchayat-led planning.
• Focus: Greater emphasis on durable rural assets, water-related works, rural infrastructure, livelihoods, agricultural productivity and climate/extreme-weather mitigation.

Emerging Concerns: 

• Disruptive transition: Delays in framing rules, administrative preparedness, and uncertainty among field functionaries have reportedly prevented the opening of new works during April-June (the peak demand season).
• From demand-driven to allocation-driven: State-wise normative allocations may constrain expenditure even when genuine employment demand is higher.
• Fiscal pressure on States: The shift to 60:40 Centre-State funding may impose a greater fiscal burden on States, particularly poorer States with high dependence on rural employment programmes.
• Seasonal suspension: A uniform 60-day pause may overlook variations in cropping seasons, labour demand and rural distress.
• Digital exclusion: Technology-enabled monitoring can improve transparency, but excessive dependence on digital authentication, biometric/facial-recognition systems and online processes risks excluding workers because of connectivity, authentication or documentation failures.

Why does it matter to India?

Rural employment guarantee is not merely a welfare programme. It serves as:

• Income security during agricultural slack periods.
• A rural safety net during economic and climatic shocks.
• A mechanism for women’s labour-force participation and financial autonomy.
• A source of rural asset creation, especially water conservation and land development.
• A tool for reducing distress migration and strengthening rural demand.
• An instrument of inclusive growth and cooperative federalism.

Wider Implications: 

• Rural livelihood security: Disruptions in guaranteed employment can depress rural incomes and demand, while increasing indebtedness, food insecurity and distress migration.
• Women’s economic empowerment: Rural employment programmes provide women with paid work, independent incomes and greater bargaining power, making continuity of employment an important gender-equity concern.
• Cooperative federalism: Greater State cost-sharing and fiscal responsibility could strain poorer States and create disparities in the implementation of a nationally significant social-security programme.
• Rights-based governance: Weakening access to employment can undermine the broader constitutional commitment to dignity under Article 21, the right to work under Article 41 and decentralised rural governance under Article 40.
• Rural asset creation: Lower employment generation can also mean fewer water-conservation, land-development, irrigation and climate-resilient community assets, weakening the programme’s developmental role.
• Rural demand and inclusive growth: Reduced wage flows can weaken local consumption and aggregate rural demand, with implications for MSMEs, agriculture-linked markets and overall inclusive growth.

Way Forward: 

• Ensure uninterrupted transition and immediately honour all registered demand for work.
• Make allocations responsive to actual demand rather than rigid fiscal ceilings.
• Provide temporary central assistance to fiscally constrained States.
• Index wages to inflation and guarantee timely payment with automatic compensation.
• Permit flexible, region-specific agricultural pauses.
• Retain offline attendance alternatives and conduct independent audits of digital exclusions.
• Strengthen Gram Sabha planning, social audits, grievance redressal and public disclosure of real-time data. 

The central issue is not simply whether VB-G RAM G provides more days and more money, but whether the new architecture can preserve the rights-based, demand-driven and accessible character of rural employment guarantee while improving asset quality, accountability and fiscal sustainability. 

Increasing the statutory guarantee to 125 days is meaningful only if work remains available on demand. Thus, VB-G RAM G must preserve the essential character of an employment guarantee.

Also Read: https://anantamias.com/current-affairs/mgnregs-coverage-fell-in-2025-26-shift-from-mgnregs-to-vb-g-ram-g/

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