Centre Announces ₹93,841 Crore Interim Allocation for VB-G RAM G, Succeeding MGNREGS
The Centre has announced an interim allocation for the Viksit Bharat — Guarantee for Rozgar and Ajeevika Mission (Grameen) [VB-G RAM G], which has replaced MGNREGS under the VB-G RAM G Act, 2025.
Total allocation: ₹92,550.17 crore for states and ₹1,291.52 crore for union territories — combined approximately ₹93,841 crore.
The Rural Development Ministry announced that no state will see a fund cut in the transition from MGNREGS to VB-G RAM G.
The allocation is being released ahead of rules being formally notified, to ensure a seamless transition and uninterrupted wages for rural workers.
Top allocations: Uttar Pradesh (₹9,721.48 crore), West Bengal (₹8,508 crore), Tamil Nadu (₹7,585.49 crore), Rajasthan (₹7,581.87 crore), Andhra Pradesh (₹7,707.21 crore), Bihar (₹6,715.83 crore).
The new scheme provides wages within one week with interest payable for delays — a significant improvement over MGNREGS payment timelines.
VB-G RAM G Act, 2025: Key Features and What Changed
The Viksit Bharat — Guarantee for Rozgar and Ajeevika Mission (Grameen) Act, 2025 was passed by Parliament and replaces the Mahatma Gandhi National Rural Employment Guarantee Act, 2005. While retaining the legal guarantee for rural employment, it introduces significant structural changes.
The interim allocation is the first major fiscal signal of the Centre's intent to maintain continuity of rural employment support through the transition — and the no-cut assurance addresses opposition concerns about states losing entitlements.
MGNREGS: The Predecessor Scheme
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was the implementation framework under the MGNREG Act, 2005 — one of India's most significant social protection programmes.
VB-G RAM G retains the core legal entitlement architecture of MGNREGS but restructures it for greater fiscal co-ownership by states, enhanced wage discipline, and a broader asset creation mandate.
Fiscal Federalism and Inter-State Allocation
The distribution of central funds for rural employment reflects complex inter-state equity considerations that are central to India's fiscal federal structure.
Key Details
- Allocation formulas for rural employment schemes typically use parameters such as rural population, poverty ratios, share of Scheduled Castes/Tribes, and previous utilisation.
- Larger states with high rural poverty populations — Uttar Pradesh, West Bengal, Bihar, Rajasthan — consistently receive the highest absolute allocations.
- The 60:40 wage-sharing in VB-G RAM G changes the fiscal federalism dynamic — states now bear a direct financial stake in demand generation, which critics argue may dampen uptake in fiscally stressed states.
- The Finance Commission (currently the 16th FC) plays a role in vertical devolution to states, but scheme allocations are made separately through central plan funds, not the Finance Commission divisible pool.
The "no fund cut" assurance is a political signal addressing states' fears that the shift from a 100% Centre-funded wage model (MGNREGS) to a 60:40 model (VB-G RAM G) would effectively reduce their effective entitlement, even if nominal allocations appear equal.
- Full name: Viksit Bharat — Guarantee for Rozgar and Ajeevika Mission (Grameen) — VB-G RAM G
- Passed by Parliament: 2025 (replaced MGNREG Act, 2005)
- Total interim allocation: ~₹93,841 crore (states: ₹92,550.17 cr + UTs: ₹1,291.52 cr)
- Top state allocations: UP ₹9,721 cr, WB ₹8,508 cr, TN ₹7,585 cr, AP ₹7,707 cr, Rajasthan ₹7,581 cr, Bihar ₹6,715 cr
- Employment guarantee: 125 days/household/year (vs. 100 days under MGNREGS)
- Wage payment: Within one week, with interest for delays
- Funding pattern: 60:40 Centre-State (NE/Himalayan states/UTs: 90:10)
- Work domains: Water security, rural infrastructure, livelihood infrastructure, extreme weather mitigation
- MGNREG Act enacted: 2005
- MGNREGS peak coverage: ~8 crore households/year
- Governed by: Central Gramin Rozgar Guarantee Council (new body)