Employment guarantee has slipped into limbo
The Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-G RAM G, Act, 2025 has replaced the two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, effective from July 1, 2026
The new law raises the statutory employment entitlement from 100 to 125 days per household per year, while introducing a 60-day pause during peak agricultural sowing and harvesting seasons
Central funding for the wage component, which was borne entirely (100%) by the Centre under MGNREGA, now requires states to contribute a share of the funding burden under the restructured cost-sharing arrangement
Concerns have been raised that converting fixed statutory entitlements into annually notified, allocation-based state-wise quotas weakens the enforceability of the underlying employment guarantee in practice, even though the law formally retains a justiciable right to work and unemployment allowance
MGNREGA, 2005 — Statutory Right to Work and Its Constitutional Roots
MGNREGA (originally the National Rural Employment Guarantee Act, 2005; renamed in 2009) was independent India's first legislation to convert a Directive Principle into a justiciable, demand-driven legal entitlement. It guaranteed at least 100 days of unskilled manual wage employment per financial year to every rural household whose adult members volunteered for such work, with an unemployment allowance payable if work was not provided within 15 days of demand. Its constitutional foundation lies in Part IV of the Constitution — Article 39(a) (adequate means of livelihood) and Article 41 (right to work, education, and public assistance in cases of unemployment) — principles that are non-justiciable on their own under Article 37 but were made enforceable through this ordinary legislation.
Key Details
- Enacted 2005 as NREGA; renamed Mahatma Gandhi NREGA (MGNREGA) on October 2, 2009
- Guarantee: 100 days of unskilled manual work per household per year (not per individual)
- Unemployment allowance triggers if work is not provided within 15 days of a valid demand
- Constitutional basis: Article 39(a) and Article 41 (Directive Principles of State Policy, Part IV) — non-justiciable DPSPs made justiciable through statute
VB-G RAM G raises the headline entitlement to 125 days but is criticized for restructuring the underlying mechanism from a demand-driven statutory guarantee into a centrally notified, allocation-based scheme — reopening the DPSP-to-enforceable-right debate that MGNREGA had settled in 2005.
VB-G RAM G Act, 2025 — Key Structural Changes
The VB-G RAM G Act, 2025 received Presidential assent and comes into force from July 1, 2026, formally repealing and replacing MGNREGA. While the government's position is that the Act preserves the statutory and justiciable right to employment and unemployment allowance, critics point to the shift from 100% central wage funding to a cost-sharing model requiring state contribution, and to the framing of state-wise allocations as annually determined by the Union government based on prescribed normative parameters — a change from MGNREGA's open-ended, demand-driven design where funding followed actual work demanded rather than a pre-fixed quota.
Key Details
- Effective date: July 1, 2026
- Entitlement raised: 100 days (MGNREGA) → 125 days (VB-G RAM G), with a built-in 60-day pause during peak sowing/harvesting seasons
- Funding pattern shift: MGNREGA was 100% Centre-funded on wages; VB-G RAM G introduces a state funding share
- State-wise allocations under VB-G RAM G are determined annually by the Union government using rules-based normative parameters, replacing MGNREGA's uncapped, demand-driven fund flow
The "limbo" framing in current commentary centers on this design tension — a nominally larger entitlement (125 vs. 100 days) delivered through a funding architecture that critics argue converts an open, demand-based guarantee into a capped, allocation-based scheme, with the state cost-share raising federalism concerns.
Cooperative Federalism and Centrally Sponsored Schemes
Centrally Sponsored Schemes (CSS) — as distinct from Central Sector Schemes — involve joint funding between the Union and states in a fixed ratio, with implementation responsibility devolved to states. Transfers for CSS are typically routed under Article 282 of the Constitution, which allows the Union or a state to make grants for any public purpose even outside its normal legislative competence. Shifting a scheme from wholly Centre-funded to a Centre-state cost-shared model is a recurring pattern across welfare programmes and is often flagged by states as increasing their fiscal burden without a commensurate increase in devolved resources.
Key Details
- Article 282 — enables discretionary Union/state grants for "any public purpose," the constitutional route commonly used for CSS funding
- CSS vs Central Sector Scheme: CSS involves state cost-sharing and state implementation; Central Sector Schemes are 100% Centre-funded and Centre-implemented
- The Finance Commission's devolution recommendations (vertical/horizontal) are a separate channel from CSS funding, often cited by states when CSS cost-shares rise
- MGNREGA's original 100% Centre-funded wage design was itself an exception to the typical CSS cost-sharing pattern for major rural welfare schemes
The introduction of a state funding share under VB-G RAM G moves the scheme closer to the standard CSS cost-sharing template, a structural shift with implications for Centre-state fiscal relations and rural employment scheme design going forward.
- MGNREGA enacted: 2005 (renamed 2009); VB-G RAM G Act, 2025 effective: July 1, 2026
- Employment entitlement: 100 days (MGNREGA) raised to 125 days (VB-G RAM G), with a 60-day peak-season pause
- Unemployment allowance trigger: work not provided within 15 days of demand (MGNREGA framework)
- Wage funding: 100% Centre-funded under MGNREGA; state cost-share introduced under VB-G RAM G
- Constitutional basis: Article 39(a) and Article 41 (DPSPs, Part IV); CSS funding typically routed via Article 282