The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB—G RAM G) Bill, 2025, was introduced in the Lok Sabha on December 16, 2025, and was passed by both the Lok Sabha and the Rajya Sabha on December 18, 2025, during the Winter Session of Parliament. Following its passage, the President of India gave assent to the bill on December 20, 2025, leading to the enactment of the VB—G RAM G Act, 2025. The act repeals and replaces the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, and marks a significant milestone in the transformation of rural employment policy in India.
Rural employment has been a cornerstone of India’s social protection framework for nearly two decades. Since 2005, MGNREGA has played a key role in providing wage employment, stabilising rural incomes supporting consumption during periods of distress, and creating basic rural infrastructure. Over time, however, the structure and objectives of rural India have evolved significantly. Rising incomes, expanded connectivity, widespread digital penetration and diversified livelihoods have altered the nature of rural employment needs. Against this backdrop, the VB—G RAM G Act, 2025, represents a comprehensive statutory overhaul of MGNREGA, aligning rural employment with the long-term vision of Viksit Bharat 2047, while strengthening accountability, infrastructure outcomes, and income security.
Background of Rural Employment Development Policy in India
Since independence, rural development policies in India have focused on reducing poverty, improving agricultural productivity, and generating employment for surplus and underemployed rural labour. Wage employment programmes have gradually evolved as key instruments for supporting rural livelihoods while further strengthening basic infrastructure, with approaches adapting to changing socio-economic conditions over time.
India’s wage employment initiatives progressed through multiple phases, beginning with early programmes, such as the Rural Manpower Programme in the 1960s and the Crash Scheme for Rural Employment in 1971 sought to provide temporary relief during periods of agrarian distress. These were followed by more structured efforts in the 1980s and 1990s, including the National Rural Employment Programme and the Rural Landless Employment Guarantee Programme, which were later merged into Jawahar Rozgar Yojana in 1993. This subsequently consolidated into the Sampoorna Grameen Rozgar Yojana in 1999, aimed at improving coverage and coordination. Complementary schemes, such as the Employment Assurance Scheme and the Food for Work Programme, addressed seasonal unemployment and food security. A major shift came with the Maharashtra Employment Guarantee Act of 1977, which introduced the concept of a statutory right to work rather than discretionary relief. These cumulative experiences culminated in the enactment of the MGNREGA in 2005, which provided a nation-wide legal framework for rural employment generation within a rights-based legislative framework.
MGNREGA: Achievements and Structural Constraints
The MGNREGA was a flagship programme aimed at enhancing livelihood security by providing at least 100 days of unskilled manual wage employment per rural household per year. Over the years, a range of administrative and technological reforms strengthened its implementation. Participation expanded, transparency improved, and digital governance deepened. Women’s participation increased steadily from 48 per cent to 58.15 per cent between FY 2013–14 and FY 2025–26. Aadhar seeding, the Aadhar-Based Payment System was widely adopted, and electronic wage payments became near-universal reducing delays and leakages. Monitoring of works improved through the expansion of geo-tagged assets and an increasing share of individual assets were created at the household level.
The experience under MGNREGA also highlighted the critical role played by field-level staff who ensured continuity and scale of implementation despite working with limited administrative resources and staffing. At the same time, deeper structural issues persisted. Monitoring across several states revealed gaps, such as works not found on the ground, expenditure not matching physical progress, use of machines in labour-intensive works, and frequent bypassing of digital attendance systems. Over time, misappropriation accumulated in some regions, and only a small proportion of households were able to complete the full 100 days of employment, especially in the post-pandemic period. These trends indicated that while delivery systems improved, the open-ended, demand-driven architecture of MGNREGA faced limitations in a changing rural economy.
Rationale for a New Statutory Framework
The need for reform was rooted in broader socio-economic changes. Rural poverty declined sharply from 27.1 per cent in 2011–12 to 5.3 per cent in 2022–23. This was supported by rising consumption, improved financial access, and expanded welfare coverage. Rural livelihoods diversified towards non-farm employment, self-employment, and services, reducing reliance on public works as the primary income source for many households. At the same time, fiscal pressures and concerns regarding efficiency, accountability, and asset quality intensified.
MGNREGA’s open-ended, demand-driven financing model increasingly conflicted with the need for predictable fiscal planning and outcome-oriented public expenditure. In this context, the VB—G RAM G Act, 2025, responds by modernising rural employment guarantees, strengthening accountability, and aligning employment creation with long-term infrastructure and climate resilience goals. It represents a comprehensive legislative reset, moving beyond incremental reform to establish a modern statutory framework aligned with the vision of Viksit Bharat 2047.
Key Features of the VB—G RAM G Act, 2025
The act guarantees 125 days of wage employment per rural household per financial year to such rural households whose adult members volunteer to undertake unskilled manual work. This enhances income security beyond the earlier 100-day entitlement. At the same time, the act provides for an aggregated 60-day no-work period to ensure the availability of agricultural labour during peak sowing and harvesting seasons. Workers continue to receive 125 guaranteed days of employment within the remaining 305 days, ensuring both farmers and labourers’ benefit.
The disbursement of daily wages is mandated to be made on a weekly basis or, in any case, not later than a fortnight after the date on which such work was done. Employment creation is integrated with infrastructure development through four priority verticals, focusing on water security through water-related works, core rural infrastructure, livelihood-related infrastructure, and special works to mitigate extreme weather events. All assets created under the act are aggregated into the Viksit Bharat National Rural Infrastructure Stack, ensuring unified and coordinated national development strategy.
Planning is decentralised through Viksit Gram Panchayat Plans, which are prepared locally and spatially integrated with national systems, such as PM Gati Shakti. Panchayati Raj Institutions play a central role in planning and execution, with Gram Panchayats implementing at least half of all works in terms of cost reinforcing local self-governance.
Financial Architecture and Fiscal Design: A major shift under the act is the transition from a central sector scheme to a centrally sponsored framework. This reflects the inherently local nature of rural employment and asset creation. Under the new architecture, states share both cost and responsibility through a normative allocation framework, creating stronger incentives for effective implementation and preventing misuse.
The fund-sharing pattern is set at 60:40 between the Centre and states for all states other than the Northeastern and Himalayan states, which receive enhanced support at 90:10. Union territories without legislatures receive 100 per cent central funding. The total estimated annual requirement of funds on wage, material, and administrative components is Rs 1,51,282 crore, including the state share, of which the estimated Central share is
Rs 95,692.31 crore.
The act provides that the central government would determine state-wise normative allocation for each financial year based on objective parameters prescribed under rules. Any expenditure incurred by a state in excess of its normative allocation must be borne by the state government. States continue to bear responsibility for unemployment allowance and compensation in case of delay in wage payments. Provisions for additional assistance during disasters and stronger oversight mechanisms aim to reduce long-term losses arising from misappropriation.
Impact on States’ Finances: The revised fiscal architecture places a significantly larger fiscal burden on states compared to MGNREGA. Under the earlier framework, the Centre covered the entire wage cost, three-fourths of material costs, and a share of administrative expenses. Under the VB—G RAM G Act, 2025, general category states will finance 40 per cent of all components, while hilly and northeastern states contribute 10 per cent, irrespective of whether the spending is on wages, materials, or administration.
Based on FY 2024–25 MGNREGA data, state spending would have risen substantially under the new cost-sharing rules. Wage costs would have increased for all states, as the Centre earlier covered the entire wage bill. Additionally, material costs would rise for most states, while reducing for northeastern and hilly states due to the lower contribution requirement. This additional fiscal burden has come at a time when states’ own revenues are growing moderately and debt remains high. For fiscally weaker states, this represents a reallocation of fiscal risk from the Centre to the states, particularly during periods of economic stress or high rural distress.
The increase to 125 guaranteed days of employment further intensifies fiscal implications. Under a demand-driven framework, higher rural distress earlier translated into higher fiscal liabilities absorbed by the Centre. Under the new framework, states may need to finance expansion beyond normative allocations or restrict access once allocations are exhausted, rendering the guarantee conditional on financing capacity.
Implementation, Monitoring, and Transparency: The act establishes a multi-tiered institutional framework for implementation across national, state, district, block, and village levels. Central and State Gramin Rozgar Guarantee Councils provide policy guidance, and oversight, while National and State Steering Committees drive strategic direction, convergence and performance review. District Programme Coordinators and Programme Officers manage planning, compliance, payments, and social audits, with Gram Sabhas playing a strengthened role in transparency and accountability.
Technology forms a core pillar of implementation, with provisions for biometric authentication, geospatial technology for planning and monitoring, mobile application-based dashboards for real-time tracking, weekly public disclosure systems and real-time MIS dashboards. Social audits are mandated at least once every six months, with enhanced public access to records and disclosures at the panchayat level. The act authorises the central government to investigate complaints, suspend fund releases in cases of serious irregularities, and direct corrective measures.
Transition and Repealed Provisions: The act repeals MGNREGA while providing detailed transitional provisions. Verified job cards under the earlier framework are likely to remain valid during the transition period. A Gramin Rozgar Guarantee Card is envisaged for adult members of every household in any rural area. Actions taken under the repealed act, including employment generated, muster rolls prepared, and wage liabilities accrued, are deemed to have undertaken under the corresponding provisions of the new act to the extent as they are not inconsistent with it. States are required to notify schemes consistent with the act within six months from its commencement.
Differences between MGNREGA and VB—G RAM G Act
MGNREGA guaranteed at least 100 days of wage employment per financial year, while the VB—G RAM G Act enhances this guarantee to 125 days. Under MGNREGA, the Centre bore the full cost of unskilled wages, whereas in the VB—G RAM G Act, wages, material, and administrative costs are shared between the Centre and states. MGNREGA operated as a central sector scheme, while the VB—G RAM G Act establishes a centrally sponsored framework with normative allocations. The VB—G RAM G Act introduces a mandatory pause of up to 60 days during peak agricultural seasons, integrates employment with four defined infrastructure verticals, mandates weekly wage payments, aggregates assets into a national infrastructure stack, and strengthens enforcement, monitoring, and transparency mechanisms.
Way forward
The VB—G RAM G Act, 2025, represents a decisive shift in India’s rural employment policy. While MGNREGA achieved significant gains in participation, digitisation, and transparency, persistent structural weaknesses limited its effectiveness. This new act builds on past improvements while addressing their shortcomings through a modern, accountable, and infrastructure-focused statutory framework. By expanding guaranteed employment, strengthening decentralised planning, restructuring fiscal responsibility, and embedding strong digital governance, the act repositions rural employment as a strategic instrument for sustainable growth and resilient livelihoods, aligned with the long-term vision of Viksit Bharat 2047.
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