Story so far: On December 18, three days after the government circulated the Viksit Bharat Guarantee For Rozgar and Ajeevika Mission (Gramin) or VB-G RAM G Bill to replace the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA), Parliament passed the bill despite protests from both the opposition and civil society. The opposition accused the government of not conducting any consultation before approving the law.
How did MGNREGA originate?
In 2005, Parliament passed the National Law on Rural Employment Guarantees. By 2008, it was extended to all districts. After 2009, it was officially renamed the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
In The Politics of Poverty Reduction in India — The UPA Government, 2004–2014, James Chiriyankandath et al write that after the victory of the United Progressive Alliance (UPA) government in 2004, a small group of prominent and progressive civil society leaders, retired civil servants and intellectuals joined the National Advisory Council (NAC), which was chaired by the National Advisory Council (NAC). Only a limited agenda was set at the NAC’s inaugural meeting, but two of its members—civil society leader Aruna Roy and economist Jean Drèze—arrived with detailed plans for two new initiatives: a Right to Information Act and an ambitious employment guarantee program for the rural poor.
The original draft of MGNREGA emerged from the NAC meeting on 19 August 2004, just a month after its first meeting. However, the bill that was sent to Parliament deviated considerably from the NAC’s proposal. The provision requiring the extension of the job guarantee to the entire country within three years was removed. The government was given the power to waive the law’s requirement, so it was effectively no longer a guarantee. Its universal nature was replaced by a means-tested approach in which only families identified as living below the poverty line could participate.
The largely watered-down bill went to the Parliamentary Standing Committee on Rural Development, headed by Bharatiya Janata Party (BJP) leader Kalyan Singh. Civil society organizations staged demonstrations in New Delhi and elsewhere. Activists clustered around the “Right to Food Campaign,” a collective of engaged citizens who fought to pass rights-based legislation. Ultimately, the committee recommended that most of the original provisions of the bill be reinstated. The government accepted the recommendation and the bill was passed in 2005.
What made MGNREGA unique?
It gave every rural household the right to claim 100 days of employment a year – unskilled manual labor at modest wages. The wage rates announced in 2025-26 ranged from ₹241 (Nagaland and Arunachal Pradesh) to ₹400 (Haryana). It was intended to save the poor from absolute poverty as a fallback. It was unique because it was universal and without any limitations. It did not target any special social category like Scheduled Castes or Scheduled Tribes. Unlike many programs in India, it was not targeted at people who have “Below Poverty Line” cards. With a highly contested metric for measuring poverty, this was a big advantage. Anyone who was willing to work could get to him.
The latest estimates show that 12.61 million active workers rely on the system. More than half of the MGNREGA workers are women. On an average, women’s participation in MGNREGA has been around 58% over the past five years. According to the Human Development Survey of India, about 45% of MGNREGA women workers either did not work or worked only on the family farm before MGNREGA. Thirty-five percent of the total workforce consists of Scheduled Castes and Scheduled Tribes. Studies have shown that consumption in Dalit and Adivasi households increases by up to 30% during the agricultural lean season.
The role of MGNREGA has also been well documented during the COVID-19 pandemic. A survey conducted by Azim Premji University assessing the impact of MGNREGA during COVID-19 found that in surveyed blocks in Karnataka, more than 60% of households felt that MGNREGA had contributed to village development.
The necessity of migration was chosen as the most important reason for continuing MGNREGA, and more than 8 in 10 respondents recommended that MGNREGA provide 100 days of work per person per year instead of 100 days of work per household. The key idea of MGNREGA was also that it would create a foundation for workers to create a culture of civic engagement based on civil rights. It has proven to have a remarkable impact, such as those associated with unions in Rajasthan and Karnataka, among others.
Why did the government buy the new bill?
Union Rural Development Minister Shivraj Singh Chouhan informed Parliament that MGNREGA was riddled with several flaws, including rampant corruption and misuse of funds by state governments. While there have been cases of theft, these have been implementation issues. MGNREGA was equipped with one of the most robust social audit mechanisms and a transparent IT-based system where every step was recorded, from demand registered, work done, payment transfers and so on.
What are the differences between them?
The new law marks a shift from a “demand-driven framework” to a “supply-driven system.” Under the new system, allocations will be limited within a fixed budget set by the Union government based on yet-to-be-specified “parameters” and employment will be provided only in rural areas notified by the Centre. While the bill increases the number of guaranteed working days from 100 to 125, it also increases the financial burden on states from the current 10% share to 40% of total spending.
Under MGNREGA, the Union Government was responsible for 100% of labor wages and 75% of material wages. In practice, this has translated into a 90:10 cost sharing between the Center and the states. However, Section 22(2) of the VB-G RAM G Act says that “the pattern of fund sharing between the Union Government and the State Governments will be 90:10 for North Eastern States, Himalayan States/Union Territories (Uttarakhand, Himachal Pradesh and Jammu and Kashmir) and 60:40 for all other Union Legislative Territories and Union Territories. While this increases the financial burden on States, the new Bill also gives the Center more control over where and how the system will be implemented. Section 4(5) states: “The Central Government shall determine the normative allocation of the State for each financial year on the basis of such objective parameters as the Central Government may prescribe.” Section 5(1) empowers the Union Government to “notify the rural areas in the State” where the scheme will be introduced. This is a departure from MGNREGA which was universal.
Another significant departure from MGNREGA is that the new bill allows for blackout periods and suspends the program during peak agricultural seasons to “facilitate availability of manpower”.
Published – 21 Dec 2025 03:20 IST
