Public debate around the VB-G RAM G Bill has focused on three headline shifts: the removal of Mahatma Gandhi’s name, the dilution of the employment guarantee, and the conversion of a fully central scheme into a 60:40 Union–State funded programme. These concerns are valid, but they do not fully capture the deeper structural transformation embedded in the new law. The critical question is whether the Bill actually remedies the weaknesses of the earlier framework — or merely replaces one set of problems with another.
From employment guarantee to asset-first logic
At its core, the new Act marks a decisive departure from the philosophy of Mahatma Gandhi National Rural Employment Guarantee Act. The earlier law placed employment as a legal entitlement, with asset creation as a secondary outcome. The VB-G RAM G framework inverts this logic.
The preamble and key sections reorient the programme towards infrastructure creation across four domains:
- Water security and water-related works
- Core rural infrastructure
- Livelihood-related infrastructure
- Mitigation of extreme weather events
These activities may generate employment, but work is now incidental rather than guaranteed. The emphasis is clearly on durable assets, not demand-driven wage employment.
Planning through Panchayats, steered by the Centre
Schemes will be prepared by Gram Panchayats through Viksit Gram Panchayat Plans and aligned with the PM Gati Shakti National Master Plan. While this improves monitoring and integration at the national level, it significantly narrows local discretion.
Panchayats can no longer freely prioritise works based on local needs. They must operate within centrally defined templates and thematic boundaries. Asset creation takes precedence over local employment demand, signalling tighter central oversight in the name of efficiency and coordination.
Selective coverage and the risk of exclusion
Unlike MGNREGA, implementation will not be universal. Only Gram Panchayats notified by the Union Government will be eligible. While formal criteria are yet to be announced, infrastructure deficit is likely to be the key filter.
This design risks excluding large parts of rural India — especially areas with high labour distress but lower infrastructure visibility. Panchayats unable to design projects within the four prescribed domains may lose out entirely, making approvals complex and potentially exclusionary.
The fragile promise of a higher employment ceiling
Section 5(1) raises the employment limit from 100 to 125 days. On paper, this appears to strengthen worker entitlements. In practice, structural constraints weaken the promise.
Employment demand and project location may not align. Labour may be unavailable where projects are sanctioned, and strict timelines under Gati Shakti will prioritise completion over participation. In such contexts, contractors — rather than local labour — are likely to fill the gap, rendering the “guarantee” operationally hollow.
The 60:40 funding shift and fiscal stress on States
The most consequential change is financial. What was once a 100% centrally funded programme is now a centrally sponsored scheme, requiring States to contribute 40%.
In 2025–26, MGNREGA’s allocation stood at about ₹86,000 crore, down sharply from earlier years. If the Centre maintains a similar outlay, States together must mobilise roughly ₹57,000 crore. For fiscally constrained States, this is a steep and often unrealistic demand.
States like Bihar may need to find around ₹4,000 crore from their own resources; Kerala may struggle to raise ₹1,500 crore. With Fiscal Responsibility and Budget Management Act limits in force, many States simply lack the fiscal space.
How funds flow — and where they break down
Each year, the Union announces a normative allocation. States are expected to budget their share, creating a pooled resource that is then distributed to districts and panchayats. At the local level, projects are designed within these ceilings and aligned with national priorities.
In theory, this ensures coherence. In practice, States often commit budgetary shares they cannot sustain. When actual disbursements fall short, central releases are withheld. Panchayats are left with stalled or half-finished projects, creating precisely the conditions where contractors step in — undermining both employment and accountability.
Administratively, this fragmentation risks becoming unmanageable.
What is likely to follow
The probable outcomes are sobering:
- Employment becomes a secondary by-product rather than a right.
- Asset creation remains fragmented, with unfinished projects.
- Administrative strain deepens at the local level.
- Trust deficits grow between Centre, States, and Panchayats.
- Pressure mounts to relax FRBM norms.
Some of these issues might have been mitigated had procedural details been left to rules rather than hard-coded into the Act, allowing flexibility as challenges emerged.
What to note for Prelims?
- VB-G RAM G shifts focus from employment guarantee to infrastructure creation
- Funding pattern changed to 60:40 Centre–State
- Scheme linked to PM Gati Shakti National Master Plan
- Coverage limited to notified Gram Panchayats
What to note for Mains?
- Critically examine the shift from rights-based employment to asset-led development
- Analyse fiscal federalism issues arising from the 60:40 funding model
- Discuss implications for Panchayat autonomy and decentralisation
- Evaluate whether infrastructure-led design can substitute employment guarantees
