MGNREGS to VB-G RAM G: Why India’s rural job guarantee has shifted from insurance to control

For nearly two decades, India’s rural employment policy rested on a deceptively simple idea: distress could be converted into a legal claim on the state. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) institutionalised this logic, offering any rural household up to 100 days of manual work on demand. That rights-based asymmetry — with the citizen as claimant and the state as duty-bearer — made MGNREGS less a welfare scheme and more a form of social insurance. With the enactment of the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, that architecture has been fundamentally reworked.

What made MGNREGS distinctive in India’s policy landscape

Launched in 2005, “Mahatma Gandhi National Rural Employment Guarantee Scheme” embedded uncertainty into its design. Employment was not pre-allocated; it was demanded. When droughts, floods or economic slowdowns hit rural labour markets, demand for work rose and public spending expanded automatically.

In FY 2024–25, MGNREGS generated about 2.9 billion person-days of work, with women accounting for over 58% of beneficiaries. The scheme rarely delivered the full 100 days per household — the average was about 50 days — but that was never its central promise. Its real value lay in being rapidly deployable, absorbing labour when other income sources failed, and cushioning volatility at the bottom of the rural economy.

The new law and the promise of modernisation

The “Viksit Bharat– Guarantee for Rozgar and Ajeevika Mission (Gramin) Act” replaces this framework with a redesigned system that the government describes as modern and development-oriented. On paper, it raises the annual entitlement from 100 to 125 days per rural household and places greater emphasis on durable asset creation, monitoring, and alignment with village development plans.

Yet headline entitlements were never the binding constraint. Employment provision under MGNREGS was shaped less by the statutory ceiling and more by how demand was financed, approved and converted into work. Without altering those underlying mechanisms, the increase in guaranteed days risks remaining largely symbolic.

From shock absorber to investment vehicle

A key shift under VB-G RAM G is the prioritisation of clustered works — water conservation, climate resilience and core infrastructure — linked to long-term village planning. Given rising climate volatility, such investments can stabilise rural incomes beyond the immediate wage impulse.

But this comes with a trade-off. Demand-driven job guarantees are most effective when they are elastic — able to scale up quickly with minimal planning when households face sudden shocks. High-quality infrastructure, by contrast, requires technical design, sequencing and longer gestation periods. As the scheme leans towards planned investment, it risks losing the very flexibility that made MGNREGS effective as insurance.

The most consequential change: financing and federal risk

The deepest break with the past lies in fiscal design. Under MGNREGS, expenditure rose automatically with demand, allowing the scheme to function as a crude but effective macroeconomic stabiliser. The Centre absorbed most of this risk.

VB-G RAM G replaces this logic with state-wise normative allocations. If demand exceeds these limits, states must finance the excess. This shifts fiscal risk downward, from the Centre — best placed to absorb shocks — to states, many of which are fiscally constrained. In years of distress, poorer states are likely to ration work, delay approvals or tighten administrative filters rather than expand spending. What was once demand-responsive risks becoming a de facto capped programme.

Seasonal pauses and the problem of rigid assumptions

The Act also permits a seasonal 60-day pause in employment, based on the assumption that rural labour demand tightens uniformly during sowing and harvesting. Evidence suggests otherwise. Rural labour markets are segmented, and labour scarcity can coexist with acute household vulnerability.

For land-poor households, women workers, and families facing health or debt shocks, MGNREGS often functioned not as a substitute for farm work but as a fallback when other income streams collapsed. A calendar-based suspension narrows the conditions under which the programme can respond, weakening its buffering role during overlapping shocks.

What kind of state does the new design presume?

The shift from MGNREGS to VB-G RAM G is not merely administrative; it is philosophical. The new framework assumes a state capable of foresight, planning and control — confident that distress can be anticipated and managed through pre-designed allocations and assets.

In an economy where shocks are becoming more frequent, uneven and climate-driven, resilience depends less on ex ante planning than on ex post responsiveness. Systems that privilege predictability over adaptability may function smoothly in normal times, yet falter when stress tests arrive.

The real test ahead

The central question is not whether VB-G RAM G will create better assets or promise more days of work. It is whether India’s rural employment system will continue to act as an automatic stabiliser in bad times, or become a more efficient but less responsive programme in good ones.

That distinction will determine whether the redesign strengthens rural resilience — or quietly dismantles one of the few instruments that allowed the poorest households to make a legally grounded claim on the state when uncertainty struck.