Under the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, states have to bear 40% of the scheme’s expenditure, except for North-Eastern and hilly states and UTs like Jammu and Kashmir, which get a relaxation. File | Photo credit: AFP
As the Center is yet to announce the formula for fixing the statutory allocations for the state under the Viksit Bharat Rozgar and Ajeevika Mission (Gramin) Guarantee Act, 2025, at least 24 states and Union Territories have nevertheless allocated funds for the new rural employment scheme.
According to the law, states have to bear 40% of the scheme’s expenditure, except for North-Eastern and hilly states and UTs like Jammu and Kashmir, which get a relaxation.
Union Rural Development Minister Shivraj Singh Chouhan on Tuesday (March 17, 2026) informed the Rajya Sabha that 27 states and UTs are making arrangements for the new scheme, though he read out allocations for only 24 of them, amounting to just over ₹31,000 crore. In the Union Budget 2026–27, ₹95,652 crore is earmarked as the Centre’s share.
Responding to criticism that states may struggle to shoulder their share of the financial burden, Mr Chouhan pointed out that even Congress-ruled Himachal Pradesh, despite its opposition to the bill, had allocated ₹143 crore. Karnataka, he noted, is the only significant outlier. “Many members have asked where the states will find the money. I am only addressing their concerns,” he said.
A key outstanding element is the center’s formula for normative allocation. Section 4(5) of the Act mandates that the central government determine state allocations on the basis of “objective parameters” every year. The aim of the clause is to ensure a fair distribution following complaints from economically weaker states that they receive disproportionately less funding.
Since this is not clear, most states have used their past MGNREGA spending as a baseline while factoring in the additional 25 working days promised under the new law, which extends guaranteed employment from 100 to 125 days. For instance, Rajasthan has spent over ₹ 7,597 crore so far under MGNREGA this financial year. Its 40% stake is roughly ₹3,038 crore. Retaining a provision for the extended job guarantee and anticipating uncertainty in central allocations, the state has earmarked ₹4,000 crore.
Published – 19 March 2026 22:16 IST
