New job guarantee plan to be supply-driven

The Hindu: - Published on 16 December 2025

Why in News?

The Union Cabinet approved the VB-GRAMG Bill in December 2025 to replace the MGNREGA, 2005. The Bill has been circulated among Members of Parliament as a “Viksit Bharat–aligned rural employment framework.” While the government projects it as a reform-oriented and fiscally prudent measure, the Opposition and civil society groups have protested, alleging dilution of the legal right to work and excessive centralisation.

Paradigm Shift: From Demand-Driven to Supply-Driven Employment

• MGNREGA provided a legal guarantee of employment on demand, making the state accountable to provide work or pay unemployment allowance.
• VB-GRAMG marks a shift to an allocation-based model, subject to budgetary ceilings and administrative discretion.
• Employment is no longer triggered by worker demand alone.
• The Bill increases the employment limit to 125 days per year.
• It allows the Centre to:

• Impose seasonal pauses
• Restrict coverage to centrally notified rural districts

• This ends the universal, year-round employment character of MGNREGA and raises concerns of exclusion during rural distress.

Funding Formula Overhaul and Federalism Concerns

• Under MGNREGA, the Centre bore nearly 90% of total expenditure, including full wage costs.
• VB-GRAMG reduces the Centre’s share to 60%.
• States’ contribution increases to 40%, except for special category states where the earlier ratio continues.
• The funding shift is legally codified in the Bill.
  • States argue that:
  • Higher financial burden may strain budgets
• Social sector spending could be affected
• Centre’s power to allocate funds based on undefined “objective parameters” raises concerns over:
  • Transparency
  • Cooperative and fiscal federalismKey Provisions: Promises and Pitfalls

Key Provisions

Supporters of VB-GRAMG highlight several positive features, including enhanced use of technology through Aadhaar authentication, geo-tagging of assets, mobile-based monitoring, and better targeting of works. The provision for seasonal pauses is justified as a means to prevent labour shortages during peak agricultural seasons and encourage skill development.

Critics, however, argue that these benefits come at the cost of diluting legal entitlements. The introduction of a budget cap may result in denial of work even when demand exists. Central notification of districts reduces state autonomy, while the increased state funding obligation risks excluding poorer states from fully utilising the scheme.

Political and Civil Society Reactions

The government has defended the Bill as a modern and sustainable reform necessary for long-term rural transformation. Opposition leaders have countered that removing MGNREGA’s rights-based framework undermines the dignity and bargaining power of rural workers. Civil society groups, particularly those associated with the Right to Information and labour movements, have described the Bill as a regression that converts workers from rights-holders into passive beneficiaries.

International Perspective

Globally, most public employment programmes are time-bound or project-based. MGNREGA stood out as a rare example of a legally enforceable employment guarantee. VB-GRAMG moves India closer to international norms by adopting a hybrid welfare model, but this also means relinquishing a globally unique rights-based approach.

Government’s Rationale

According to the Statement of Objects and Reasons, the new framework is designed to reduce distress-driven migration, integrate skill development with rural works, ensure predictable public expenditure, and support the long-term vision of Viksit Bharat. The government argues that fiscal discipline and administrative efficiency are essential for sustainable development.

Recent data shows that MGNREGA generated around 260 crore person-days of employment in FY 2024–25, with women accounting for nearly 60% of beneficiaries, underscoring both the scale of the programme and the fiscal pressures involved.

Way Forward

A balanced approach is essential to reconcile efficiency with equity. Gradual implementation through pilot projects, transparent criteria for allocation, institutionalised consultation with states, strong grievance redressal mechanisms, and possible Finance Commission-linked compensation could help address federal and social concerns.

Conclusion

VB-GRAMG represents a critical turning point in India’s welfare architecture. While reforming MGNREGA to improve efficiency and fiscal sustainability is necessary, any replacement must preserve the core principle of employment as a right rather than a concession. The true test of VB-GRAMG will lie in its ability to combine administrative efficiency with social justice in rural India.