For nearly two decades, the Mahatma Gandhi National Rural Employment Guarantee Act defined India’s rural safety net. By legally guaranteeing the “right to work”, it reshaped the relationship between the state and rural citizens. Yet, as flagged by the Economic Survey 2026, the design of MGNREGA had reached its structural limits. The replacement of the scheme in late 2025 by the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB-GRAM-G Act) marks a decisive shift — from employment as subsistence support to employment as an instrument of long-term rural transformation.
Why MGNREGA needed a rethink
MGNREGA succeeded in cushioning rural distress during droughts, agrarian slowdowns, and economic shocks. However, over time, three persistent weaknesses became evident. First, much of the work generated was short-term and low-productivity, often criticised for creating little durable value. Second, employment rarely reached the statutory 100-day limit for most households. Third, chronic issues of delayed wage payments and funding uncertainty weakened its credibility.
The Economic Survey argued that while MGNREGA ensured survival, it struggled to create assets or livelihoods capable of sustaining rural incomes beyond daily wages.
GRAM-G Act: a shift from labour to assets
The VB-GRAM-G Act represents a conceptual departure. Labour is no longer treated as an end in itself but as a means to build what the government terms the Viksit Bharat National Rural Infrastructure Stack. Project selection is tied to long-term economic returns rather than short-term employment absorption.
Priority is given to high-value and durable assets such as rural cold storage chains, decentralised micro-grids, water conservation systems, and climate-resilient roads. Public expenditure on wages is thus directly linked to strengthening the productive base of the rural economy.
Rethinking employment guarantees and funding
The Act raises the guaranteed employment entitlement from 100 to 125 days per rural household. Acknowledging that actual employment under MGNREGA rarely crossed 50 days, the new law introduces a “Normative Funding” model.
Instead of being purely demand-driven, funding is now predictable and centrally sponsored, with a 60:40 Centre–State cost-sharing ratio. This aims to address recurring fund shortages and wage delays by ensuring advance budgetary provisioning and smoother cash flows.
From wage labourer to rural entrepreneur
Perhaps the most transformative feature of the GRAM-G Act is its reimagining of the rural worker. The Act introduces a structured skill ladder — from entry-level Sahayak to skilled Daksh and expert Pravin workers.
By integrating vocational training, certification, and direct access to micro-credit, the scheme creates pathways for workers to transition from public works to self-owned enterprises. Community assets built under the programme are expected to seed private livelihoods, embedding entrepreneurship within the rural economy.
Governance reforms and digital accountability
The success of this transition rests on tighter governance. Every asset created under the Act is geo-tagged and tracked through public dashboards. Biometric verification replaces paper-based attendance, and Aadhaar-linked weekly wage payments are mandated to minimise leakages and delays.
These measures seek to address long-standing concerns around transparency, ghost beneficiaries, and administrative inefficiencies that plagued the earlier framework.
Balancing employment with agricultural cycles
Unlike MGNREGA’s year-round availability, the GRAM-G Act introduces a 60-day “no-work” window during peak sowing and harvesting seasons. This provision is designed to prevent labour shortages in agriculture while still preserving the full 125-day employment entitlement across the year.
The move reflects an attempt to harmonise public employment with farm-sector realities rather than competing with them.
A new social contract for rural India
Taken together, the VB-GRAM-G Act signals a shift in rural policy — from welfare-oriented workfare to investment-led development. It seeks not just to provide income support, but to build skills, assets, and ownership within rural communities.
While its success will depend on implementation, capacity at the state level, and sustained funding, the intent is clear. The older framework focused on survival. The new one aims to create capability and stakeholding, aligning rural livelihoods with India’s broader vision of Viksit Bharat by 2047.
What to note for Prelims?
- MGNREGA guaranteed 100 days of wage employment; GRAM-G raises it to 125 days.
- GRAM-G shifts focus from short-term work to durable rural infrastructure.
- Funding model moves from demand-driven to normative, with a 60:40 Centre–State split.
What to note for Mains?
- Limitations of MGNREGA in asset creation and income sustainability.
- GRAM-G as a shift from welfare to investment-led rural development.
- Role of skills, entrepreneurship, and digital governance in rural transformation.
- Balancing employment guarantees with agricultural labour needs.
