The proposed transformation of the Mahatma Gandhi National Rural Employment Guarantee framework into VB-G RAM G, aligned with the Viksit Bharat 2047 vision, has sparked intense political and academic debate. Much of this criticism, however, has relied more on rhetoric than evidence. A closer, data-driven reading of the proposed changes suggests that the overhaul is less a dismantling of rural employment guarantees and more an attempt to recalibrate them to India’s evolving rural economy.
Why the old employment guarantee model needed a reset
The original “” promised 100 days of wage employment to every rural household. Two decades on, this legal guarantee translated weakly on the ground. Only about 7.5–8 per cent of households ever completed the full 100 days of work, while the average employment per household stagnated at around 50 days even in recent years. This structural underperformance, despite large fiscal outlays, highlighted the limits of a purely demand-driven model in a changing rural context.
The new framework’s target of 125 days of employment per household seeks to correct this mismatch incrementally, recognising that mere legal entitlement has not ensured adequate work availability or uptake.
Fiscal burden fears and what the numbers actually show
A major criticism of VB-G RAM G is the shift from a largely central sector scheme to a centrally sponsored one with a standard 60:40 Centre–State funding ratio. Critics argue this will strain state finances. Historical expenditure trends do not support this fear.
Over the last 19 years, the Union government has borne the overwhelming share of programme costs, with nearly 80 per cent of total spending occurring in the last decade alone. Budgetary allocations have steadily risen, reaching their highest-ever level in 2025–26. Moreover, states’ borrowing limits remain capped at 3 per cent of GDP, making additional debt-financed expenditure legally implausible. In effect, fiscal responsibility remains largely centralised even under the revised design.
Correcting wage stagnation and labour compensation
One of the weakest aspects of MGNREGA has been wages that failed to keep pace with living costs. Nominal wages have increased substantially over time, but real wage growth remained modest for long periods. The shift to a centrally sponsored structure is expected to strengthen wage-setting mechanisms and ensure more predictable compensation.
Equally important is the removal of “disentitlement” provisions that earlier penalised workers for procedural lapses. The revised framework places the onus on states to proactively inform workers of upcoming projects, reducing the risk of exclusion caused by administrative opacity.
From short-term income support to productive asset creation
A persistent criticism of MGNREGA has been its emphasis on labour absorption over economic relevance. Many projects generated temporary income but created few durable assets. This disconnect is reflected in the consistent gap between work demanded and work actually provided by states.
VB-G RAM G seeks to reorient expenditure toward four integrated domains—water security, rural infrastructure, livelihood infrastructure, and climate resilience. Assets are to be geo-tagged and integrated into the Viksit Bharat National Rural Infrastructure Stack, aligning local works with national planning frameworks such as PM Gati Shakti. The intent is to ensure that rural employment simultaneously strengthens local economies.
Normative allocation replacing fluctuating demand
Another significant shift is the move away from an open-ended demand-driven allocation to a normative funding model. Under this approach, state-wise allocations would be based on objective parameters such as the number of gram panchayats and participation of women workers, balancing equity with efficiency.
This resembles the logic used by the Finance Commission in tax devolution and is expected to reduce year-to-year volatility in funding while incentivising better implementation practices across states.
Reviving grassroots governance through Panchayati Raj
The reforms also seek to revitalise the spirit of the “”, which envisioned empowered rural local governments. Gram panchayats are expected to play a more proactive role in identifying locally relevant projects that align employment generation with long-term development, including digital connectivity and skill development.
Does rural poverty still hinge on employment guarantees?
With rural poverty declining significantly over the last decade, MGNREGA expenditure now accounts for a relatively small share of household income near the poverty line—around 10 per cent on average. This suggests that rural livelihoods have diversified beyond public works employment. In this context, treating MGNREGA as the primary anti-poverty instrument may no longer reflect economic realities.
What to note for Prelims?
- Key differences between MGNREGA and VB-G RAM G
- Funding patterns and Centre–State cost-sharing models
- Role of Panchayati Raj Institutions in rural development
- Integration of rural assets with PM Gati Shakti
What to note for Mains?
- Limits of demand-driven welfare schemes in a transforming rural economy
- Fiscal federalism implications of centrally sponsored schemes
- Shift from employment guarantee to asset-based rural development
- Balancing social protection with productivity and governance reforms
VB-G RAM G represents an attempt to keep a legacy welfare programme relevant in a rapidly changing rural India. Whether it succeeds will depend less on ideology and more on implementation, coordination, and the ability of institutions to adapt to new developmental realities.
