Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has been a significant part of India's policy framework for nearly two decades, providing rural households with the right to demand 100 days of employment. This rights-based approach places the citizen as a claimant and the state as a duty-bearer, acting as insurance against labor market volatility.

• In FY 2024-25, MGNREGS generated 2.9 billion person-days of work, with women making up 58.15% of the beneficiaries.

Transition to Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Act, 2025

The VB-G RAM G Act, enacted in 2025, replaces MGNREGS, promising modernization with increased workdays and an emphasis on asset creation and development alignment. However, it reflects a philosophical shift from uncertainty to control.

• The annual employment entitlement increased from 100 to 125 days per household.
• Average employment provided per household was 50.24 days in 2024-25, similar to past years, indicating that the effectiveness depends on institutional mechanisms rather than the number of days.

Asset Quality and Durability

VB-G RAM G focuses on clustering works around water conservation, climate resilience, and infrastructure, aligning with village development plans. This can provide long-term benefits beyond immediate wages, especially in climate-affected areas.

Trade-offs and Challenges

The scheme faces challenges in balancing rapid labor absorption with the creation of high-quality infrastructure, which requires planning and longer gestation. This shift could reduce flexibility during distress situations.

Fiscal Shifts and Federal Implications

Previously demand-driven, the new Act introduces state-wise allocations, moving fiscal risk from the central to state governments. This could lead to poorer states rationing work during stress, weakening the program's demand-responsive nature.

Seasonal Work Pause

The inclusion of a 60-day employment pause based on labor market assumptions may not account for the segmented nature of rural labor markets. MGNREGS provided a safety net during shocks, which may be compromised under the new framework.

Conclusion

The crucial question is whether VB-G RAM G can maintain its role as a stabilizer during economic shocks or if it will merely offer efficiency in stable times. The system's resilience and adaptability are key, especially as economic shocks become more frequent.