The Center plans to replace the two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (MGNREGA) with a revamped legislation that promises more days of work but asks states to share the burden and freezes employment during the agricultural season.
Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin) or VB–G RAM G Bill, 2025 expands employment from 100 days to 125 days, sharpens focus on strategic infrastructure, introduces localized and integrated planning and revises existing funding model.
The FAQs circulated by the Ministry of Agriculture and Rural Development stated that the program has been shifted from a central sector to a centrally sponsored program as rural employment is local in nature and states now have to share costs and responsibilities. According to the FAQ, the mode of funding between the Center and the states will be changed to 60:40. The Bill proposes a 90:10 split for North Eastern and Himalayan States and some Union Territories.
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Under the current arrangement, states pay 25% of materials and 50% of administrative costs, the FAQ said.
As part of a measure aimed at strengthening income security in rural areas, the employment guarantee within the scheme was increased from 100 to 125 days. This increase is expected to provide rural households with additional wage employment to help them cope with income uncertainty and rising living costs. Officials said the expanded guarantee would offer greater financial stability, especially during periods of agrarian distress and limited employment opportunities outside agriculture.
“Increasing the number of guaranteed days to 125 is a welcome step,” said AK Verma, director of the Center for the Study of Society and Policy (CSSP), as it is likely to provide additional remuneration to workers. “However, the 60:40 sharing provision can be inconvenient for states because they are short on cash.”
However, the increased burden on state governments to fund the employment guarantee scheme could have been due to poor implementation and corruption at the state level, Verma said. He added that states can now be more vigilant. “One of the benefits of cost-sharing will be that states, which are the implementing mechanism of the system, can tighten oversight and supervision over the disbursement of funds.”
Each state government must also notify its plan to operationalize the guarantee within six months of the commencement of the bill. “In the event that eligible applicants are not provided with work within the specified period, according to the draft law, the state government will be obliged to pay unemployment benefits in accordance with the provisions of the law.
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The bill also overhauls the implementation of the scheme. The Central Gramin Rozgar Guarantee Board and the State Gramin Rozgar Guarantee Board will be established to review, monitor and effectively implement the provisions of the legislation in the respective areas, according to a separate document issued by the Ministry of Agriculture.
The method of distribution of funds is also to change. Central and State level Steering Committees will be constituted to recommend matters relating to normative allocations, convergence and other such matters.
For the first time, the bill proposes to suspend guaranteed employment during peak agricultural seasons to ensure the availability of agricultural labor.
States would be required to give advance notice of a total period aggregating to 60 days in a financial year, including sowing and harvesting, during which no work will be started or carried out under the Act. States may issue area-specific notifications based on agro-climatic zones and local agricultural activity patterns.
The revised framework places greater emphasis on the development of rural infrastructure. It prioritizes four categories of work: water security through groundwater conservation, irrigation and recharge; core rural infrastructure to improve basic amenities and service delivery; livelihood assets that support agriculture, related activities and income diversification; and climate-resilient work to prepare villages for extreme weather events. Together, it aims to strengthen rural systems, improve livelihoods and build resilience and align public works with the Viksit Bharat 2047 vision.
The framework also suggests stronger incentives to curb abuse, regional planning through Gram Panchayat plans and clear division of roles. “With the Center setting the standards and states responsible for implementation and accountability. This cooperative model is expected to improve efficiency and reduce leakages,” the FAQ said.
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“Better incentives to prevent abuse, regionally tailored plans through Gram Panchayat plans. Center maintains standards while states implement accountability and this partnership model improves efficiency and reduces abuse,” reads the FAQ.
A statement from the agriculture ministry said MGNREGA was set up in 2005 but rural India has changed since then. “So, to meet the changing aspirations, stronger convergence is required. Therefore, the government has decided to increase the wage employment guarantee for rural households from 100 days to 125 days per financial year to anchor rural asset creation through the enactment of a relevant law.”
The government kept The MGNREGA allocation in the FY26 budget was unchanged from the previous year ₹86,000 million crowns. Government spending under this scheme jumped in FY21 ₹100,000 crore due to the Covid-19 pandemic. However, it was reduced in the budget allocations, which were later revised due to high demand. For example, in fiscal year 24, the government allocated ₹60,000 crore, but later revised its estimate to ₹86,000 million crowns.
MGNREGA was the flagship rural employment program of the previous Congress-led United Progressive Alliance regime. The proposed renaming of the scheme drew sharp criticism from opposition parties.
Renaming the scheme is a way of erasing Mahatma Gandhi from our national psyche, especially the villages, where he says India’s soul resides, said KC Venugopal, Indian National Congress Member of Parliament from Alappuzha.
“This move is also nothing more than a cosmetic change on paper over the deliberate neglect of the scheme. MGNREGA workers are demanding higher wages but the Center has reduced the funds allocated to the scheme year after year. The arrears keep piling up and this seems to be a carefully planned strategy to ensure the slow death of the scheme,” Venugopal wrote on social media platform X.
