Budget 2026: Viksit Bharat-G RAM G Outlay Rises, States Face Higher Burden

The Union Budget 2026-27 has allocated ₹95,600 crore for the newly restructured Viksit Bharat-G RAM G rural employment scheme, signalling an enhanced focus on rural job creation amid continued employment stress in agrarian regions. The allocation represents an increase of nearly ₹10,000 crore over the ₹86,000 crore provided for MGNREGA in 2025-26, but it also introduces a significant shift in financial responsibility towards state governments.

Higher Allocation Reflects Rural Employment Push

The enhanced outlay indicates a stronger central commitment to sustaining rural employment as wage demand remains elevated across several states. The government has positioned VB-G RAM G as a more efficient and outcome-oriented successor framework, with an emphasis on durable asset creation and better convergence with other rural development programmes. In absolute terms, the higher allocation is intended to ensure continuity of employment support while restructuring the scheme’s operational design.

Revised Cost-Sharing Formula Alters Federal Balance

Under the new framework, the Centre will fund 60 per cent of the total scheme cost, while states will now be required to contribute the remaining 40 per cent. This marks a sharp departure from the earlier MGNREGA model, where the Centre largely bore wage costs and most material expenses, leaving states with only a limited financial role. Northeastern and Himalayan states remain exceptions and will continue under the 90:10 Centre-state funding pattern.

Fiscal Pressure and Work Generation Concerns

State finance departments are assessing the fiscal implications of the revised structure. Preliminary estimates suggest that additional annual liabilities could run into several thousand crores for larger and fiscally constrained states, depending on employment demand. Senior officials note that even under MGNREGA, states often faced delays in reimbursements. With higher mandatory contributions now required, there are concerns that states may impose tighter administrative caps on work generation to manage budgetary stress.

Important Facts for Exams

• VB-G RAM G replaces MGNREGA with a revised funding structure.
• Centre-state cost sharing is now 60:40 for most states.
• Northeastern and Himalayan states retain a 90:10 funding ratio.
• Rural employment spending increased by nearly ₹10,000 crore in FY27.

From Rights-Based Guarantee to Fiscal-Linked Provision

The government argues that the new framework will improve efficiency and accountability. However, senior officials point out that MGNREGA’s defining feature was its rights-based guarantee of work on demand, irrespective of fiscal ceilings. With VB-G RAM G operating under a conventional cost-sharing model, the ability to fully meet employment demand may increasingly depend on states’ fiscal capacity and willingness to allocate funds, potentially altering the scheme’s on-ground impact.