VB-G RAM G Replaces MGNREGA with Major Rural Employment Changes

VB-G RAM G to Replace MGNREGA

VB-G RAM G Replaces MGNREGA with Major Rural Employment Changes: The Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, popularly known as VB-G RAM G, is set to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) from July 1, 2026.

The Ministry of Rural Development has released eight draft rules covering the implementation of the new framework. The government has invited public objections and suggestions before formally notifying the rules.

Static GK fact: MGNREGA was enacted in 2005 and provides a statutory employment guarantee to rural households willing to undertake unskilled manual work.

MGNREGA: The Earlier Framework

Under MGNREGA, rural households were entitled to 100 days of guaranteed wage employment per year.

The programme followed a largely demand-driven model, with allocations linked to labour budgets submitted by states. In 2025–26, the scheme benefited more than five crore rural families, while the Centre funded the entire wage component.

Employment Guarantee Increased to 125 Days

One of the major changes under VB-G RAM G is the increase in guaranteed employment from 100 days to 125 days per year.

This represents a 25% increase in the statutory employment guarantee.

However, the new framework introduces a 60-day pause during peak agricultural sowing and harvesting seasons. The objective is to ensure sufficient availability of agricultural labour during crucial farming periods.

Static GK Tip: The additional 25 days increase the annual employment guarantee, but the seasonal pause changes when beneficiaries can seek employment.

States to Bear 40% of the Funding Burden

A major structural change concerns financing.

Under the earlier MGNREGA framework, the Centre funded 100% of the wage bill. Under VB-G RAM G, states will generally bear 40% of the funding burden, increasing their fiscal responsibility.

Special arrangements apply to certain regions:

• Northeastern and Himalayan states: Centre bears 90%.
• Union Territories with a legislature: Centre bears 90%.
• Union Territories without a legislature: Centre bears 100%.

This shift could place additional pressure on states with high demand for rural employment.

From Demand-Driven to Normative Allocation

VB-G RAM G changes the manner in which funds are allocated.

Instead of relying primarily on state-submitted labour budgets, the Central government will determine a normative allocation for each state. This represents a shift from a demand-driven model to a more top-down allocation framework.

The change gives the Centre greater control over fund flows but may reduce states’ flexibility in responding to sudden increases in local employment demand.

16th Finance Commission Formula

The Centre will use the Sixteenth Finance Commission’s horizontal devolution formula for determining normative allocations.

Based on the framework described, states such as Tamil Nadu, Andhra Pradesh, Rajasthan and Maharashtra could receive comparatively lower allocations, while Uttar Pradesh, Gujarat, Madhya Pradesh, Assam, Haryana, Punjab and Bihar could receive higher allocations.

Static GK fact: The horizontal devolution formula determines how the divisible pool of central taxes is distributed among states using specified criteria.

Performance-Based Allocation

VB-G RAM G introduces a provision allowing the Centre to withhold a portion of the normative allocation and distribute it based on state performance.

Possible performance indicators include:

• Timely payment of wages.
• Compliance with social audit requirements.
• Percentage of works completed during a financial year.
• Other indicators specified by the Centre.

The exact proportion to be withheld has not yet been determined. This provision is scheduled to apply from the next financial year.

States Bear Excess Expenditure

Another important fiscal provision applies when employment demand exceeds a state’s normative allocation.

If expenditure goes beyond the Centre’s share because of higher-than-allocated demand, the state will have to bear the additional expenditure.

This could create significant financial pressure for states where rural households regularly depend on employment programmes during periods of weak agricultural activity or economic stress.

DBT-Based Wage Payments

Under VB-G RAM G, wages and unemployment allowances will be transferred through Direct Benefit Transfer (DBT) into beneficiaries’ bank or post-office accounts.

The system is intended to improve transparency, reduce leakages and streamline payments.

However, the wage rate under the new framework is yet to be announced by the Union government.

What Happens to Existing MGNREGS Workers?

Existing MGNREGS job cards will continue to remain valid after renewal and verification through e-KYC.

They can be used to seek employment under VB-G RAM G until state governments issue the new Gramin Rozgar Guarantee Cards.

This transitional arrangement is intended to ensure that workers do not lose access to employment during the shift from the old legislation to the new framework.

Eight Draft Rules

The Ministry of Rural Development has released eight draft rules dealing with the implementation of VB-G RAM G:

1. National Level Steering Committee Rules.
2. Grievance Redressal Rules.
3. Administrative Expenses Rules.
4. Transitional Provisions Rules.
5. Objective Parameters for Normative Allocation Rules.
6. Central Gramin Rozgar Guarantee Council Rules.
7. Manner of Payment of Wages and Unemployment Allowance Rules.
8. Rules governing expenditure incurred by states beyond normative allocations.

The Union government has allocated ₹95,692.31 crore for VB-G RAM G for 2026–27.

Key Concerns and Implications

For states, the 40% funding responsibility could become a major fiscal challenge, especially for states facing high rural employment demand and potentially lower allocations.

For workers, the increase to 125 guaranteed days is beneficial, but the 60-day seasonal pause and yet-to-be-announced wage rate create uncertainty. Performance-linked funding could also indirectly affect implementation if states face difficulties meeting compliance requirements.

For Centre-State Relations, the transition from demand-driven allocation to normative allocation, combined with performance-linked fund distribution, represents a significant change in the governance of a major rural welfare programme.

The new framework therefore has implications not only for rural employment and welfare delivery, but also for fiscal federalism and Centre-State relations.

Static Usthadian Current Affairs Table

VB-G RAM G Replaces MGNREGA with Major Rural Employment Changes: