From Right to Discretion: What the Repeal of MGNREGA Signals for India’s Welfare State

One of the world’s largest rights-based public employment programmes has been dismantled. The “Mahatma Gandhi National Rural Employment Guarantee Act”, which for two decades guaranteed rural citizens a legal right to work, has been replaced by the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025. The shift is not merely administrative. It marks a decisive break from a rights-based welfare framework towards a centrally controlled, discretionary model of employment provision — with far-reaching political, economic and democratic implications.

What has changed in the new law?

Enacted in 2005 as NREGA and renamed in 2009, MGNREGA created a demand-driven entitlement: any rural household that sought work was legally guaranteed up to 100 days of employment, with compensation payable for delays. The new VB-G RAM G Act inverts this principle. Employment is no longer a right triggered by demand, but a supply-driven programme in which the Centre decides how much work will be provided, where, and to whom.

This centralisation effectively caps employment and weakens state autonomy. States no longer respond to local demand; instead, they implement centrally determined allocations. As economist “Jean Drèze”, one of the architects of the original law, has argued, this amounts to dismantling the programme in substance, if not in name.

Why the renaming matters: politics and ideology

The removal of Mahatma Gandhi’s name is not incidental. Gandhi symbolised a moral claim to dignity through work, anchoring the programme in an ethical vision of justice for the poorest. Rebranding the scheme under the “Viksit Bharat” banner signals an ideological rupture — a move away from rights and towards executive discretion.

For the ruling “Bharatiya Janata Party”, the repeal represents a repudiation of the social policy legacy of the “United Progressive Alliance”, under which rights-based laws sought to temper the inequalities produced by post-liberalisation growth.

The fiscal shift that weakens states

One of the most consequential changes lies in financing. Under MGNREGA, the Centre bore the full wage cost and over 90% of total expenditure, giving states strong incentives to implement the programme. The new law revises this to a 60:40 Centre–State funding ratio.

For fiscally constrained states, especially poorer ones, this could prove prohibitive. With limited capacity to absorb the additional burden, states may restrict project approvals, indirectly suppressing demand for work. Devolution without adequate fiscal support thus threatens the programme’s viability, undermining India’s federal balance.

Why MGNREGA mattered in the first place

MGNREGA emerged from the contradictions of post-1991 India — rapid GDP growth alongside agrarian distress, jobless growth and widespread livelihood insecurity. By the time the UPA assumed office in 2004, rural distress had deepened, exposing the limits of market-led development.

Alongside the Right to Information Act and the Forest Rights Act, MGNREGA represented a rights-based corrective. It did not reject liberalisation but sought to embed enforceable entitlements within it, asserting that political equality requires material security and institutional guarantees.

A democratic innovation, not just a welfare scheme

Unlike targeted welfare programmes, MGNREGA addressed livelihoods directly. It treated employment as the most dignified form of social protection in an economy where most workers remain outside formal labour markets.

Its universality and demand-driven design were democratic innovations: work was a legal entitlement, delays attracted compensation, and social audits empowered citizens to hold local authorities accountable. During the COVID-19 crisis, it functioned as a vital economic shock absorber, reinforcing its role as an institutional mechanism through which citizens could make enforceable claims on the state.

The retreat from rights-based welfare

Over the past decade, rights-based welfare has faced sustained opposition from neoliberal interests and corporate capital, often framed as fiscally irresponsible or economically distortive. Despite strong empirical evidence of MGNREGA’s positive effects on rural wages, productivity and resilience, the political tide has turned decisively.

Replacing a legal right with discretionary state benevolence depoliticises structural economic injustice. Welfare becomes an instrument of executive largesse rather than a citizen’s claim, weakening accountability and transforming social protection into a tool of political loyalty.

A stark contrast in legislative process

When MGNREGA was enacted, it enjoyed unanimous parliamentary support — a rare cross-party consensus. The VB-G RAM G Act, by contrast, was rushed through Parliament amid Opposition walkouts, without scrutiny by a Standing Committee and with no consultation with those most affected.

The contrast is emblematic. An Act that stood for two decades was overturned in days, while groups like the “NREGA Sangharsh Morcha” were denied permission to protest. Rights can be dismantled overnight; dissent must wait.

What is ultimately at stake

Globally admired for its scale and rights-based design, MGNREGA helped institutionalise the idea that dignity through work is a constitutional obligation of the state. Its repeal represents not just the end of a programme, but a systematic rollback of legal entitlements, federal autonomy and democratic accountability.

Beyond rural employment, the deeper question is whether India’s democracy will continue to recognise livelihoods as a matter of right — or recast them as discretionary benefits, contingent on fiscal convenience and political will.