DR RACHNA K PRASAD
For nearly two decades, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) stood as a cornerstone of India’s social contract. Enacted in 2005, it was celebrated globally as a pioneering example of a demand-driven safety net, offering a legal “right to work” that cushioned millions of rural households against economic distress.
Now, India has entered a new era with the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB-GRAM G). This legislation does not simply replace MGNREGA—it reimagines rural employment for the 21st century, aligning it with the vision of Viksit Bharat 2047. The government frames this transition as a socio-economic transformation, and rightly so: VB-GRAM G represents a fundamental restructuring of how India supports its rural workforce, moving from a centrally funded entitlement toward a shared responsibility model that empowers states, strengthens agriculture, and expands opportunities.
Shared Responsibility: The 40% Fiscal Partnership
One of the most significant changes introduced by VB-GRAM G lies in its funding model. Under MGNREGA, the central government bore nearly the entire wage burden, making the guarantee effectively “free” for states. VB-GRAM G introduces a uniform cost-sharing ratio:
- General Category Statesnow finance 40% of wages, materials, and administration.
- Hilly and North-Eastern States contribute only 10%, reflecting their unique developmental challenges.
This change is not a burden—it is an empowerment mechanism. By sharing costs, states gain greater ownership of rural employment programs. They are incentivised to tailor schemes to local needs, innovate in project design, and integrate employment with regional development priorities.
For example, a state like Rajasthan, with high participation in rural employment programs, can now align VB-GRAM G projects with its water conservation initiatives. Similarly, North-Eastern states can leverage their reduced fiscal share to expand eco-tourism, agro-processing, and community-based enterprises.
This partnership model strengthens cooperative federalism, ensuring that rural employment is not just a national guarantee but a joint mission of the Centre and states.
Predictability and Planning: From Demand-Driven to Normative Allocation
MGNREGA was open-ended, with states submitting labour budgets based on anticipated demand. While this flexibility was valuable, it often led to uncertainty in fund flows. VB-GRAM G introduces a normative allocation system, where the Centre prescribes fixed annual allocations based on objective parameters.
This shift brings predictability and stability. States can plan projects with clarity, knowing their annual allocation in advance. It also encourages long-term infrastructure development, as employment schemes can be aligned with state-level priorities such as irrigation, renewable energy, or rural connectivity.
During times of distress—such as droughts or pandemics—states may bear additional responsibility, but this also empowers them to design context-specific responses. For instance, a state facing agricultural stress can prioritise employment in watershed management or food security projects.
The normative model thus transforms VB-GRAM G into a planning tool, not just a relief measure.
Supporting Agriculture: The 60-Day Farm Pause
A unique innovation in VB-GRAM G is the mandatory 60-day pause during peak sowing and harvesting seasons. This responds to long-standing demands from farmers who feared labour shortages during critical agricultural cycles.
By pausing employment schemes during these periods, VB-GRAM G ensures that farmers have access to labour when they need it most. At the same time, workers benefit indirectly, as stronger agricultural productivity supports rural economies and stabilises food prices.
This integration of rural employment with agriculture reflects a holistic vision: employment schemes should not compete with farming but complement it. The pause creates a rhythm where rural households can participate in both agricultural work and guaranteed employment, balancing income sources across the year.
Expanding Opportunities: The 125-Day Guarantee
Perhaps the most headline-grabbing feature of VB-GRAM G is the expansion of guaranteed work from 100 to 125 days per household. This represents a bold commitment to deepening the safety net.
While ambitious, this expansion signals the government’s vision of inclusive growth. More days of guaranteed work mean more opportunities for households to earn, save, and invest in their futures. It also allows states to design longer-duration projects—such as rural roads, irrigation canals, or renewable energy installations—that require sustained labour.
For rural women, who have been significant participants in employment schemes, the 125-day guarantee offers greater scope for empowerment. Extended work opportunities can be linked to skill development, self-help groups, and micro-enterprises, creating pathways from wage labour to entrepreneurship.
Strengthening States, Strengthening India
VB-GRAM G arrives at a time when states are seeking greater fiscal autonomy. By sharing responsibility, the Act encourages states to innovate, prioritise, and integrate rural employment with broader social sector goals.
For example:
- Kerala and Tamil Nadu, with high pre-committed liabilities, can align VB-GRAM G projects with their strong social sector programs, ensuring synergy between employment, health, and education.
- Punjab and Jharkhand, facing debt challenges, can use VB-GRAM G to channel labour into productivity-enhancing projects that reduce long-term fiscal stress.
This integration ensures that VB-GRAM G is not just about wages—it is about developmental transformation, where employment schemes contribute to infrastructure, sustainability, and social welfare.
Beyond Wages: Building Assets and Skills
VB-GRAM G emphasizes that rural employment should not be limited to short-term relief. By encouraging states to design projects that build durable assets—such as irrigation systems, renewable energy grids, and community infrastructure—the Act ensures that guaranteed work translates into long-term value creation.
Moreover, the program can be linked to skill development initiatives, preparing rural workers for emerging opportunities in construction, agro-processing, and digital services. This transforms VB-GRAM G into a bridge between subsistence and prosperity, equipping rural households for the future economy.
Cooperative Federalism in Action
At its core, VB-GRAM G embodies the spirit of cooperative federalism. By sharing fiscal responsibility, aligning employment with agriculture, and expanding opportunities, the Act creates a framework where Centre and states work together to uplift rural India.
This partnership is not just financial—it is strategic. States gain flexibility to design context-specific programs, while the Centre provides stability and vision. Together, they ensure that rural employment is not a stopgap measure but a pillar of national development.
A Guarantee for the Future
The transition from MGNREGA to VB-GRAM G marks a pivotal moment in India’s economic policy. We are witnessing the evolution of a demand-led central entitlement into a state-shared responsibility, governed by budget caps, agricultural integration, and expanded opportunities.
While the promise of 125 days of work is ambitious, it reflects a vision of inclusivity and empowerment. By capping the Centre’s contribution and shifting responsibility to states, VB-GRAM G ensures that rural employment is not just a national guarantee but a collaborative mission.
In this new framework, the “right to work” remains secure, but it is now embedded in a system that emphasises partnership, planning, and productivity. Far from ending the legacy of MGNREGA, VB-GRAM G builds upon it—creating a modernised safety net that empowers states, supports farmers, and uplifts rural communities.
The umbrella of rural employment has not disappeared—it has been strengthened, expanded, and reimagined for the future.
(Dr Rachna K Prasad is Asst Professor of Political Science at the University of Delhi. She can be contacted at drrachnaprasad24@gmail.com)