Govt to replace MGNREGA with new rural jobs scheme G RAM G, guarantees 125 days of work at near Rs 96,000 crore budget allocation
The Union Government formally notified, on 11 May 2026, the nationwide implementation of the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Grami...
What Happened
- The Union Government formally notified, on 11 May 2026, the nationwide implementation of the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) [VB–G RAM G] Act, 2025, effective 1 July 2026.
- The Act repeals the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, ending a 21-year-old statutory framework for rural wage employment.
- The new law guarantees 125 days of paid unskilled wage employment per year to eligible rural households — 25 days more than MGNREGA's 100-day mandate.
- A record central budgetary allocation of Rs 95,692.31 crore has been made for 2026-27; combined with state contributions, total programme outlay is projected to exceed Rs 1.51 lakh crore.
- Existing MGNREGA job cards with completed eKYC remain valid until new Gramin Rozgar Guarantee Cards are issued; workers without cards may still register at the Gram Panchayat level and cannot be denied employment due to pending eKYC.
- Civil society groups, including the NREGA Sangharsh Morcha, have raised concerns about the transition being undertaken without sufficient public consultation and about digitisation barriers facing the most vulnerable workers.
Static Topic Bridges
MGNREGA — The Law Being Replaced
The Mahatma Gandhi National Rural Employment Guarantee Act was enacted on 23 August 2005 and came into force in February 2006 under the National Rural Employment Guarantee Act (NREGA); "Mahatma Gandhi" was added as a prefix in 2009. It represented the world's largest employment guarantee programme, providing a statutory right — enforceable in law — to at least 100 days of unskilled wage work per financial year to any rural household whose adult members demanded it. The Act drew its constitutional legitimacy from Article 41 of the Directive Principles of State Policy (right to work) and Article 21 (right to life with dignity). It was demand-driven rather than supply-driven: the government was obligated to provide work within 15 days of a demand being made, failing which an unemployment allowance became payable.
- Enacted under Entry 23 (social security and insurance) of the Concurrent List (Seventh Schedule).
- Unemployment allowance liability rested on state governments, not the Centre.
- Funding was almost entirely borne by the Centre for wages and partially shared for materials.
- Employed over 100 million unique workers at peak; persondays crossed 3.4 billion in FY 2020-21 (COVID year).
- LibTech India's data for FY 2025-26 recorded steep deterioration: 6.7 million fewer workers gaining employment, persondays down by 577.1 million, and households completing 100 days of work down 40.5%.
Connection to this news: VB-G RAM G formally repeals MGNREGA from 1 July 2026, replacing a rights-based demand-driven welfare framework with a productivity-aligned development model — a structural philosophical shift that UPSC frequently tests.
Directive Principles of State Policy (DPSP) and Right to Work
Part IV of the Constitution (Articles 36–51) contains the Directive Principles, borrowed from the Irish Constitution. They are non-justiciable (cannot be directly enforced in courts) but are fundamental to governance. Article 41 directs the State to "make effective provision for securing the right to work" within the limits of its economic capacity. Article 43 calls for securing a living wage and decent conditions of work for workers. DPSPs represent the positive obligations of the State and are a recurring Mains question in the context of welfare legislation.
- DPSP vs Fundamental Rights: DPSPs are non-justiciable (Kesavananda Bharati, 1973 reaffirmed their complementary — not subordinate — status to Fundamental Rights post-42nd Amendment).
- Article 21 (Fundamental Right): The Supreme Court has expansively interpreted it to include the right to livelihood (Olga Tellis v. Bombay Municipal Corporation, 1985).
- 42nd Constitutional Amendment (1976) added the word "socialist" to the Preamble, strengthening the moral basis for employment guarantees.
- The 44th Amendment (1978) inserted Article 38(2) directing the State to minimise inequalities in income and status.
Connection to this news: VB-G RAM G continues to rest on the same constitutional foundation — Article 41 DPSP and Article 21 — but shifts the emphasis from welfare entitlement to development productivity, illustrating how the same constitutional provisions can underpin different policy philosophies.
Cooperative Federalism and Cost-Sharing in Centrally Sponsored Schemes
India's Constitution does not use the term "Centrally Sponsored Scheme" (CSS); the framework evolved through Finance Commission recommendations and executive practice. Under the old MGNREGA, wage costs were borne almost entirely by the Centre, creating limited fiscal incentive for states to manage demand and quality efficiently. VB-G RAM G restructures this to a 60:40 Centre–State cost-sharing for wages, materials, and administration for general states, with 90:10 for North-Eastern and Himalayan states, and 100% central funding for Union Territories without legislatures. The Centre also sets normative (cap) allocations; state expenditure beyond the cap is borne by the state.
- The NITI Aayog sub-group (2015) recommended rationalising CSS into core and core-of-core schemes to reduce fiscal proliferation.
- The 15th Finance Commission (2021–26) reinforced the principle that CSS should not crowd out states' own discretionary spending.
- States retain liability for unemployment allowance and wage delay compensation under VB-G RAM G — a design incentive to ensure timely work provision.
- Administrative expenditure ceiling raised from 6% (MGNREGA) to 9% (VB-G RAM G) to improve capacity, staffing, and technical support.
Connection to this news: The revised cost-sharing model reflects an ongoing negotiation between the Centre and states in cooperative federalism — directly testable in GS Paper 2 (Centre–State relations, federalism).
Social Audit as an Accountability Mechanism
Social audits are a form of participatory accountability where communities directly examine official records, bills, and muster rolls to detect fraud, ghost workers, and inflated expenditure. MGNREGA institutionalised social audits under Section 17 of the Act, requiring Gram Sabhas to audit all works at least once every six months. The Comptroller and Auditor General (CAG) and civil society organisations like the Society for Social Audit, Accountability and Transparency (SSAAT) in Telangana have demonstrated its effectiveness. The VB-G RAM G Act retains and strengthens this mechanism, mandating biannual social audits supported by real-time dashboards, GPS-based work monitoring, and AI-enabled anomaly detection.
- Social audits are distinct from financial audits: they are citizen-led, conducted in public forums (Jan Sunwais), and examine both financial and non-financial outputs.
- The Mazdoor Kisan Shakti Sangathan (MKSS) pioneered social audits in Rajasthan in the 1990s, which directly influenced the MGNREGA's design.
- Parliament's Standing Committee had flagged weak social audit implementation in several states under MGNREGA.
- VB-G RAM G adds GPS monitoring, mobile dashboards, and weekly public disclosure — moving from periodic to continuous accountability.
Connection to this news: The retention and strengthening of social audits in VB-G RAM G is a key design continuity that signals the government's commitment to anti-corruption mechanisms — directly relevant to GS Paper 2 questions on accountability and transparency.
Viksit Gram Panchayat Plan and Decentralised Planning
Under MGNREGA, Gram Panchayats were the primary implementing agency and planning unit, with shelf-of-works prepared annually. VB-G RAM G introduces the "Viksit Gram Panchayat Plan" as the mandatory planning origin for all works. This plan must be aggregated upward through block and district levels into the "Viksit Bharat National Rural Infrastructure Stack," integrated with PM Gati Shakti's GIS-based infrastructure mapping. The planning framework thus connects village-level employment to national infrastructure goals — a convergence of welfare and development planning.
- The 73rd Constitutional Amendment (1992) inserted the Eleventh Schedule, listing 29 subjects for Panchayati Raj Institutions (PRIs), including rural development and public health.
- Article 243G empowers legislatures to endow PRIs with powers and authority for economic development and social justice.
- MGNREGA was widely credited with strengthening Gram Panchayats' financial and administrative capacity.
- VB-G RAM G mandates a National Level Steering Committee and State Committees for convergence and coordination.
Connection to this news: The Viksit Gram Panchayat Plan architecture deepens the 73rd Amendment's vision of bottom-up planning — a conceptual anchor for Mains answers on decentralisation and grassroots governance.
Digitisation in Social Protection: Opportunities and Risks
India's JAM Trinity (Jan Dhan–Aadhaar–Mobile) was designed to streamline benefit delivery, reduce leakages, and ensure direct transfer to beneficiaries. Under MGNREGA, Aadhaar-based payments and eKYC were progressively mandated. However, the LibTech India report for FY 2025-26 revealed that 45.4% of all workers — and 9.5% of active workers — could not complete eKYC, blocking their access to employment. VB-G RAM G doubles down on digital infrastructure: biometric attendance at worksites, Aadhaar-linked payment via the Aadhaar Payment Bridge System (APBS), geospatial tracking, and AI-based fraud detection. It also provides an explicit safeguard: workers may not be denied employment on grounds of pending eKYC verification.
- The Supreme Court in Puttaswamy v. Union of India (2017) upheld Aadhaar's constitutionality for welfare programmes with conditions: exclusions caused by Aadhaar failure cannot deprive citizens of benefits.
- The "last-mile" connectivity gap: as of 2025, approximately 30% of India's rural population lacks reliable internet access (Telecom Regulatory Authority of India data).
- Face-authentication attendance systems piloted under MGNREGA showed high error rates for elderly women workers, a vulnerable demographic.
- Payment within 3 days is a stated goal of VB-G RAM G — versus chronic delays of weeks or months under MGNREGA.
Connection to this news: The tension between efficiency gains from digitisation and exclusion risks for the most vulnerable is a core Mains theme — connecting technology policy, social justice, and rights-based governance.
Climate Resilience and Rural Employment: A Policy Convergence
A distinctive shift in VB-G RAM G is its explicit alignment with climate adaptation. The Act's four priority work domains include water security and extreme weather event mitigation alongside rural infrastructure and livelihood infrastructure. Works must be drawn from plans integrated with PM Gati Shakti. The Act also requires states to announce a seasonal pause of up to 60 days during peak agricultural sowing and harvesting — recognising the complementarity between wage employment and farm labour markets.
- India is ranked among the world's most vulnerable nations to climate change impacts, particularly in agriculture (IPCC AR6 Report, 2022).
- MGNREGA's watershed development and water conservation works (check dams, farm ponds, recharge shafts) have improved groundwater levels in drought-prone districts — a documented co-benefit of employment programmes.
- The International Labour Organization (ILO) has advocated "green jobs" frameworks that combine employment guarantees with ecological restoration.
- VB-G RAM G's alignment with Viksit Bharat @2047 positions it as a long-term development tool, not merely a safety net.
Connection to this news: The climate-rural employment nexus is an emerging UPSC Mains theme bridging GS Paper 1 (geography/environment) and GS Paper 3 (economic development, disaster management).
Key Facts & Data
- Full name: Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) [VB–G RAM G] Act, 2025.
- Presidential assent: 20 December 2025; notified for implementation on 11 May 2026; effective 1 July 2026.
- Employment guarantee: 125 days per rural household per year (vs. 100 days under MGNREGA).
- Central budget allocation (2026-27): Rs 95,692.31 crore; total outlay with states projected above Rs 1.51 lakh crore.
- Cost-sharing: 60:40 (Centre:State) for general states; 90:10 for NE and Himalayan states; 100% Centre for UTs without legislatures.
- Unemployment allowance: Payable after 15 days if work is not provided (same trigger as MGNREGA); liability on states.
- Wage payment target: Within 3 days (chronic delays under MGNREGA were a major grievance).
- Administrative ceiling: Raised from 6% (MGNREGA) to 9% of programme cost.
- Four priority domains: Water security; rural infrastructure; livelihood-related infrastructure; extreme weather event mitigation.
- Social audit: Mandatory at least twice a year; supported by GPS monitoring, AI anomaly detection, and weekly public disclosure.
- Transition safeguard: Existing eKYC-verified MGNREGA job cards remain valid until new Gramin Rozgar Guarantee Cards are issued; eKYC pendency cannot be grounds for denial of employment.
- MGNREGA performance decline (FY 2025-26, LibTech India): 6.7 million fewer workers employed; persondays down 577.1 million; 100-day completions down 40.5%; average persondays per worker fell from 50.18 to 42.92; total expenditure dropped from Rs 67,834.79 crore to Rs 56,264.91 crore.
- eKYC exclusion (FY 2025-26): 45.4% of all registered workers could not complete digital verification requirements.
- MGNREGA enacted: 23 August 2005; operational from February 2006; "Mahatma Gandhi" prefix added 2009.
- Constitutional basis: Article 41 (DPSP — right to work), Article 21 (right to life with dignity), 73rd Amendment (Panchayati Raj planning).