RIP MGNREGA

Last week the Indian govt. introduced a surprise bill in the parliament to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and on December 21st it became official.

The new law is officially called the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) or VB-G RAM G. The govt. says that their aim is to modernise rural employment but the bill has got major backlash from the opposition.

We will critically analyse the changes introduced by the govt. and try to understand their implications on the ground but to do this we must first understand what MGNREGA was and how it functioned.

What Was MGNREGA?

Since 2005, MGNREGA served as the ultimate safety net for rural India. It stated that any adult in a rural household had a legal right to demand work. If the govt. failed to provide employment within 15 days then it was required to pay the worker an allowance despite no work being done.

The scheme guaranteed 100 days of unskilled manual labour per household each year such as digging ponds or cleaning canals. Additionally to this the central govt. paid 100% of the wages which meant that states did not have to bear the salary burden (a rare moment where the centre actually opened its wallet without making a face).

MGNREGA was also not constrained by a fixed budget. If more people demanded work due to a bad monsoon or rural distress then the govt. was legally obligated to allocate additional funds to meet that demand.

What Has Changed Under the New Law?

The VB-G RAM-G Act retains some features of the old system but changes the core rules in four major ways.

1. The employment guarantee has been increased from 100 to 125 days per household but states are now allowed to pause the scheme for up to 60 days a year during peak agricultural seasons. In practice this means that during periods such as the sowing or harvesting season the state govt. can officially suspend MGNREGA work on the grounds that rural workers are expected to find employment on farms instead.
2. Under MGNREGA the central govt. paid all wages but under the new law the wages are funded through a 60:40 split with the central govt. paying 60% and state govts. required to contribute the remaining 40%.
3. MGNREGA was demand driven which meant that work had to be provided whenever households asked for it but the new law moves toward something called normative allocations where the central govt. sets a budget cap for each state based on estimated need. If a state exhausts this allocation then it may have to stop providing work or fund additional employment entirely from its own resources.
4. To reduce corruption and eliminate ghost workers the law mandates biometric attendance, GPS tracking of worksites and AI based fraud detection mechanisms.

Govt. Logic for the Change (with my criticisms)

125 Days Upgrade: The govt. argues that by increasing the guaranteed work days from 100 to 125 that they are providing a 25% boost to the income potential of rural households.

My criticism: The issue is that this increase is largely symbolic because even under the old system the national average for actual work provided was usually less than 50 days per year due to administrative delays and budget shortages. Only about 2% of all rural households got a full 100 days of work under MGNREGA. All this simply means that adding more days to a guarantee that isn’t being fully met in the first place doesn’t help a worker if the govt. still lacks the infrastructure to provide the work. No harm by this amendment but useless nonetheless.

60 Day Pause: A major complaint from the farming community has been the shortage of labour during peak sowing and harvesting seasons. The govt. believes that by allowing a 60 day pause they can prevent the state from competing with private farmers for labour which would send more labour to the farms and ensure that crops are harvested on time and keeps the agricultural economy moving without artificial labour shortages.

My criticism: For the last 20 years MGNREGA was like a minimum wage that actually worked which meant that if a local landlord offered a worker a tiny salary then the worker could say “no thanks I’ll go do government work instead” but now by pausing the scheme for 60 days the govt. takes away that backup plan which means that without an alternative choice the workers are forced to take whatever low pay the local powerful landlords offer. By removing the govt. option the state is essentially creating a monopoly for big landowners because during these two months the poor have many people looking for work but only a few people (the rich farmers) hiring. This allows the buyers of labour to dictate the price and keep wages artificially low just when the workers need money the most. When the govt. income stops for two months the families still need to eat and without a paycheck many will be forced to take high interest loans from the same landlords they work for. This can lead to a debt trap where workers end up working for free or for very little just to pay back what they borrowed to survive the pause. In many cases if there is no govt. work and the local farm wages are too low to live on then these families will be forced to pack up and move to big cities in search of work. This is called distress migration and it breaks up families and pulls children out of school without any guarantee of a better life in the city all because their safety net was pulled out from under them.

60:40 Funding Split: The govt. believes that in the old system since the central govt. paid 100% of the wages the state govts. had no incentive to monitor the program for efficiency or fraud. Now by requiring states to contribute 40% the govt. intends to create skin in the game which will make the states now be much more vigilant about how every rupee is spent because it is coming out of their own state treasury.

My criticism: India has very rich states (like Maharashtra) and very poor states (like Bihar). Under the old law a worker in Bihar had the same right to a job as a worker in a rich state because Delhi paid the bill. Now if a poor state runs out of money or has a budget crisis they might simply stop offering work. Your right to work is no longer a national right since it depends on whether your specific state is broke or not. If wages are delayed then the central govt. can just say “oh but we sent our 60% but the state govt. didn’t pay their 40%” and the worker is left caught in the middle of a political fight and waiting for their money while the two govts. point fingers at each other. This is even worse for accountability especially considering how most people aren’t even able to get the 100 days of work currently promised to them. For states like Jharkhand or Odisha (that have high poverty but low tax revenue) when you force them to pay 40% of a massive employment bill it would force them to cut spending on other things like hospitals or schools just to keep the job scheme running which means even in the best case where you can still create the same number of jobs it creates a cruel choice for local govts.

Normative Allocation: The govt. says that the old demand driven system was a financial black hole because there was no fixed budget and so the central govt. never knew exactly how much money it would have to shell out each year. By moving to normative allocations the central govt. now sets a fixed budget for each state at the start of the year based on objective parameters (like how many poor people live there) which would allow for better national budgeting, prevents states from overspending and align the scheme with modern rural realities (as they call it) where the govt. believes poverty has dropped and fewer people need this kind of help.

My criticism: A lot… It’s like a fire department saying they’ve reached their water quota for the month while your house is still on fire.

a. The whole point of the old system was that it was counter cyclical which meant that if the monsoon failed and crops died then thousands of people would suddenly ask for work at the same time and the govt. had to pay up. Under the new normative system if a state hits its budget cap by August because of a drought then it has no more allowance left for the rest of the year and the work simply stops exactly when the people are most desperate.

b. Under the old law the right to work meant it was a crime for the govt. to deny you a job and it was a justiciable right (meaning you could take the govt. to court if they didn’t pay you). Now if you set a budget cap through this normative allocation then the govt. is effectively saying that they only guarantee you a job if they have the money they initially set aside. This takes all the power away from the citizen and gives it back to the bureaucrats because if the money runs out (ofc not through corruption xd) then your legal right becomes a piece of paper that doesn’t buy groceries.

c. Since the central govt. now decides the normative allocation based on their own parameters they have a switch they can use to control states. This just means that the central govt. can use this as a political weapon by giving more allowance to states ruled by their own party and squeezing the budget for states ruled by the opposition and as a result the worker in a rival state suffers because of a political fight in Delhi.

d. The govt. is advertising 125 days of work but the normative allocation is often calculated based on much lower numbers so it’s like a parent promising their child 125 minutes of playtime but only giving them 20 minutes worth of battery in their toy. If the budget isn’t large enough to actually cover 125 days for everyone who needs it then that 125 day guarantee is just going to end up becoming a marketing slogan for the elections as it is already on News18 by Anand Ranganathan.

Viksit Technology: The govt. claims that the old system was full of corruption including ghost workers (fake names on payrolls) and that by mandating biometric attendance, GPS tagged photos of worksites and AI to spot suspicious patterns the govt. can make sure that 100% of the money reaches the intended recipient’s bank account.

My criticism: This is so unrealistic. Lmao biometrics in farms?!!

a. In the old system if you worked you got paid but in the new system your pay depends on the app working so if there is no 4G signal in a remote village or if the govt. server is down the supervisor can’t mark your attendance which means even if you work 8 hours in the hot sun the system doesn’t see you. This is called rationing by glitch where the govt. saves money not because people don’t want to work but because the technology failed to record them.

b. To make the system clean the govt. recently required all workers to complete a digital e-KYC (face authentication) within a very short 31 day window so millions of workers who didn’t have smartphones, lived in areas with no internet or were away from home for a few weeks were simply deleted from the system and in late 2025 alone over 27 lakh workers disappeared from the rolls. The govt. calls them ghosts but many are real people who just couldn’t jump over the digital hurdle in time.

c. Under the old law the local Gram Sabha had the power to verify workers but now the power has moved to an AI algorithm in an office in Delhi or a state capital and if the AI flags you as a fraud because of a technical error it is almost impossible for a villager to argue with a computer program.

Final Thoughts

Ultimately the death of MGNREGA and the birth of VB-G RAM G is the exact same thing we’ve seen before with things in countries like South Africa and Ethiopia when similar rural job schemes moved from being open ended rights to fixed budget caps and the result was just mass exclusion. Whenever the money ran out or a technical glitch happened the poor were simply told to wait and wait often meant go hungry.

By forcing a 60:40 split the centre gets to take 100% of the credit for the 125 days promise (which would definitely help in elections) while only paying 60% of the bill and when a poor state runs out of cash and the work stops the centre can just point fingers and say not my problem.

The bottom line is that we’ve traded a solid right to work for a high tech terms & conditions scheme where if a villager loses their pay because a server in Delhi is down or a landlord needs cheap labour then it just leads to the opposite of modernisation and it’s just making poverty more complicated and less visible.