Authored By: Pranshu Ananya
Iswar Saran Degree College, University of Allahabad
Abstract
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) of 2005 established India’s first statutory guarantee of a “right to work” of 100 days of wage employment annually for rural households. The Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (VB-G-RAM-G) replaces MGNREGA with a promise of 125 days, but restructures the legal framework from right based to budget capped. This research examines both schemes’ statutory provisions, implementation challenges, and comparative effectiveness. Analysis reveals that while VB-G RAM G addresses MGNREGA’s administrative weaknesses through technology and asset-focused planning, it simultaneously converts an enforceable individual entitlement into a supply-driven, centrally-controlled allocation a transformation experts contend represents rollback rather than reform.
Introduction
Rural poverty and unemployment have plagued India’s development trajectory. MGNREGA, enacted in 2005 and renamed in 2009, emerged as a watershed moment as the first law statutorily guaranteeing a “right to work”. It was born from the early 2000s agricultural crisis marked by farmer suicides, MGNREGA represented a paradigm shift from discretionary welfare to enforceable entitlements.
However, persistent structural challenges such as delayed wage payments, internal corruption, inadequate work availability, and low asset quality which asked for the legislative reforms. After nearly 2 decades of implementation, with poverty declining to 5% (2023-24) and employment demand failing 53% from FY 2021 to FY 2026. Parliament passed VB-G-RAM-G in December 2025, officially repealing MGNREGA.
The government allocated Rs. 95,692.31 crore for VB-G-RAM-G while an allocation of Rs. 30,000 crore has been made for the MGNREGA’s shift or transition.
MGNREGA 2005: Statutory Framework
MGNREGA’s defining feature is Section 3(1), which casts an obligation on State Governments to provide employment to every household whose adult members volunteer to do unskilled manual work. This establishes employment as a statutory right, not discretionary welfare which is enforceable by individual beneficiaries. In MGNREGA the employment was guaranteed for 100 days of wage employment per financial year at minimum wages with mandatory gender parity, Workers would have demanded employment by submitting written applications to Gram Panchayats.
States must provide employment within 15 days, creation an enforceable legal duty. If the government cannot give a job within 15 days, the person who applied must be paid money instead at least one-fourth of the minimum wage for the first 30 days and at least half of the minimum wage after that. This makes the job guarantee something people can enforce through the courts.
In MGNREGA, The Central Government historically bore 100% of the cost for unskilled manual labour. State governments were responsible for contributing 25% of the material costs, as well as the cost of unemployment allowance if work was not provided within 15 days.
Despite of landmark legal status, persistent weaknesses necessitated reform:-
a) Delayed wage payments: Delays stretching months, forcing beneficiaries into predatory credit markets.
b) Fabrication of job cards, fake beneficiaries, misappropriation of Rs. 193.67 crore in FY 2024-25
c) Administrative Capacity Deficits: Severe shortage of programme officers and technical staff at block and gram panchayat levels
d) Only &.61% of registered households completed full 100 days in FY 2024-25 and many more.
VB-G RAM G ACT, 2025: New Statutory Framework
Enhanced Employment Guarantee:-
Section 5(1) provides 125 days of wage employment in each financial year. This means the scheme increases the work guarantee by 25 %.
Conditional Coverage:-
Unlike MGNREGA, which applies universally to all rural areas, this scheme gives employment only in those rural regions that the Central Government notifies. This gives the Centre the power to decide which areas are covered and turns a universal right into a conditional benefit.
Supply Driven Funding Model:-
Section 4(6) states that the Central Government will decide how much money each state will receive every year based on specific criteria. This changes the funding structure from MGNREGA’s demand driven and open-ended system to a fixed budget system. If any state spend more than the amount allocated, it must pay the extra cost itself.
Cost Sharing Reconstructing:-
The funding pattern is now 60 percent by the Centre and 40 percent by the State for most states. Under MGNREGA, the Centre earlier paid almost the entire wage cost. Northeastern and Himalayan states will receive 90 percent support from the Centre while they contribute 10 percent.
Agricultural Season Pause:-
States can stop the scheme for up to 60 days in a financial year during the main sowing and harvesting periods. Because of this, even though the scheme guarantees 125 days of work, states that use the full pause can provide only up to 65 days of actual employment.
Viksit Gram Panchayat Plans (VGPPs):
Planning is now supported by spatial technology and linked with PM Gati Shakti, which is the national spatial planning system. This changes the earlier model of local, bottom up decision making and brings planning more in line with centrally guided priorities.
Four Thematic Verticals:
All works must fall within four areas: water security, rural infrastructure, livelihood infrastructure, and disaster preparedness. This structure focuses more on creating productive assets compared to the wider range of activities allowed under MGNREGA.
Technology Integration:
Real time GPS monitoring, AI based fraud detection, biometric authentication, and weekly public dashboards are introduced to improve transparency and accountability.
Comparative Analysis
The legal character of the scheme has changed significantly. Under MGNREGA, workers had a statutory right that could be enforced, meaning any individual in a notified rural area could demand work or seek compensation if work was not provided. Under VB G RAM G, the guarantee still exists in law but it now depends on central government notifications and fixed budget limits. This makes the benefit conditional rather than universally available. Instead of a universal scheme that covered all notified rural areas, the new framework applies only to areas that the Centre selects. Enforceability also becomes weaker. While MGNREGA was demand based and allowed workers to claim employment as a right, the new system is supply based and workers can only receive employment to the extent permitted by the annual central allocation. Labour rights groups argue that this change converts an enforceable right into a discretionary allocation mechanism.
The funding model also places a heavier burden on states. For example, Andhra Pradesh, which historically has high participation, is estimated to face an additional annual expenditure of about ₹6,300 crore under the requirement that states must bear 40 percent of the cost. Similar pressures are expected nationwide. This can lead to a reduction in actual person days provided to workers, delays in wage payments in financially weaker states, and a risk of exclusion for poorer regions that cannot afford their 40 percent share.
The employment guarantee also changes when comparing the promised quantity and the practical reality. MGNREGA gives a statutory guarantee of 100 days of work per year and is supported by an unlimited, demand driven funding system. In contrast, VB G RAM G guarantees 125 days of work per year but operates under fixed ceilings created by normative allocations. Since states may pause the scheme for up to 60 days during agricultural seasons, the practical maximum reduces to 65 days. Budget calculations further show that the Union Budget 2026 to 27 allocates Rs 95,692.31 crore to cover more than 270 million beneficiaries. When this amount is spread across all households, it provides only around 52 days of work per household each year. This means workers receive only about 42 percent of the promised 125 days, which is also lower than MGNREGA’s effective 100 day guarantee.
A major philosophical shift is also visible. MGNREGA was built on the idea that individuals demand work and states must respond by providing employment or compensation. Funding increased whenever demand increased. In VB G RAM G, the Centre decides in advance how much money each state will get based on specific parameters. Workers are expected to adjust to the supply available. Accountability therefore changes direction: earlier states had to respond to workers’ needs, while now workers must fit within the centrally determined budget.
In terms of assets and administration, VB G RAM G does attempt improvements. The focus on water security, climate resilience and other thematic areas is meant to create better quality assets. The scheme also permits a 9 percent administrative cost ceiling compared to MGNREGA’s 6 percent, which may enable better staffing and oversight. Transparency mechanisms are stronger as well, including real time GPS tracking, AI based fraud detection, biometric authentication, and weekly public dashboards. These systems offer progress compared to MGNREGA, where only 32 percent of gram panchayats were audited in 2023 to 24. If supported with adequate funding, these administrative upgrades could bring genuine improvements in outcomes.
Which Scheme Is Better: Comparative Verdict
A comparison of both schemes shows that MGNREGA performs better on several core dimensions of worker protection. MGNREGA provides a more reliable guarantee because workers are able to receive around 100 days of documented employment, while VB G RAM G delivers only about 52 days in practice. In terms of asset quality, VB G RAM G performs better because it follows a thematic approach and allows greater administrative capacity, although this advantage depends entirely on whether the scheme receives sufficient funding. Transparency and fraud prevention are also stronger under VB G RAM G due to the use of digital tools, artificial intelligence monitoring, and real time systems.
For rights protection, MGNREGA is clearly stronger. It is a demand based entitlement which includes enforcement through unemployment allowance. VB G RAM G does not provide this level of enforceability because access depends on central budget limits. MGNREGA also ensures stronger federal equity since the Centre bears most of the financial responsibility, which means even financially weaker states can guarantee equal access. This is not the case under VB G RAM G, where poorer states may be unable to meet their required share. For the poorest beneficiaries, MGNREGA offers much better protection because its demand driven system expands automatically when poverty increases. VB G RAM G does not expand when needs rise since it is limited by fixed budget ceilings.
A critical assessment for the poorest quintiles, who depend heavily on subsistence work, shows that MGNREGA’s structure is materially superior. Under MGNREGA, when poverty rises or local distress increases, the scheme naturally provides more work. Under VB G RAM G, this does not happen because allocations do not increase automatically.
The overall conclusion is that MGNREGA remains the stronger framework for guaranteeing employment to the poorest households. VB G RAM G may create better quality assets and offers stronger technology based monitoring, but these benefits depend entirely on adequate budgets and fair implementation, both of which are not yet assured.
Conclusion
The shift from MGNREGA of 2005 to VB G RAM G of 2025 represents a major restructuring of India’s rural employment system. While VB G RAM G promises 125 days of work, it replaces a rights based and demand driven guarantee with a system limited by fixed budgets and centrally determined supply. This weakens individual enforceability, since workers can no longer claim employment as a legal right but only within the boundaries of the annual allocation.
The practical outcomes further highlight this weakening. Budget estimates show that despite the 125 day promise, actual delivery may be only about 52 days, which is far below MGNREGA’s effective 100 day guarantee. Federal equity also suffers because the cost shift to states means poorer states may be unable to provide the same level of employment. At the same time, VB G RAM G introduces meaningful improvements such as thematic asset creation, stronger administrative capacity, and enhanced transparency through digital monitoring, though these gains depend entirely on adequate funding and fair implementation.
For the poorest households that depend on subsistence employment, MGNREGA’s demand driven structure remains materially superior because it automatically expands during times of distress. A balanced policy path for India would preserve this rights based framework while selectively adopting the technological and efficiency improvements of VB G RAM G. Only such a hybrid model can ensure constitutional guarantees while supporting modernization, and it is essential for achieving the vision of a truly inclusive Viksit Bharat.
