The NDA government has proposed a sweeping revamp of India’s rural employment guarantee system through the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Bill, 2025. The Bill seeks to repeal and replace the Mahatma Gandhi National Rural Employment Guarantee (MGNREG) Act, 2005.
While the proposed law increases the statutory guarantee of wage employment for rural households from 100 to 125 days in a financial year, it also introduces major structural changes. These include a new cost-sharing formula with states and a shift away from the demand-driven nature of the existing scheme—moves that could significantly raise the financial burden on state governments.
Circulated ahead of its introduction in Parliament, the Bill also, for the first time, allows states to pause employment guarantees during peak agricultural seasons.
- Job guarantee raised to 125 days
Under the VB-G RAM G Bill, every rural household with adult members willing to do unskilled manual work will have a legal right to 125 days of wage employment per year.
At present, MGNREGA guarantees “not less than 100 days” of work, which in practice has become the ceiling unless special approvals are granted. Although the Centre has allowed additional days in specific cases—such as for Scheduled Tribe households in forest areas or during droughts and natural calamities—these are conditional. The new Bill makes 125 days a uniform statutory entitlement across rural India.
- States to share wage costs
One of the most significant changes is in funding. Currently, the Centre bears the full wage cost for unskilled labour under MGNREGA. The VB-G RAM G Bill introduces mandatory cost sharing between the Centre and states.
Under Section 22(2), the proposed funding pattern is:
90:10 for Northeastern states, Himalayan states and certain Union Territories such as Uttarakhand, Himachal Pradesh and Jammu & Kashmir
60:40 for all other states and UTs with legislatures
100% Central funding for UTs without legislatures
This represents a major fiscal shift, as states will now directly contribute to wage payments in addition to existing responsibilities like unemployment allowance and parts of material and administrative costs.
- Normative allocation instead of demand-driven funding
The Bill does away with MGNREGA’s demand-driven labour budget system and replaces it with a “normative allocation” model. Under Sections 4(5) and 4(6), the Centre will fix annual, state-wise allocations based on defined parameters.
Any spending beyond this limit will have to be met by the state government, effectively ending the open-ended funding mechanism where funds were released based on actual demand for work.
- Work can be paused during peak farm seasons
For the first time, states will be allowed to suspend employment guarantee works for up to 60 days a year during peak sowing and harvesting periods. These pauses must be notified in advance and can be tailored down to the gram panchayat level.
While intended to ensure adequate farm labour during crucial agricultural periods, this provision also shortens the effective window in which households can access the 125-day employment guarantee.
- Weekly wages, safeguards retained
The Bill proposes weekly wage payments, or at the latest within a fortnight—an improvement over the current 15-day limit. Wage rates will continue to be notified under provisions similar to Section 6 of MGNREGA.
Importantly, the Bill retains safeguards for delayed payments, including compensation at the existing rate of 0.05% per day beyond the stipulated period.
Overall, the VB-G RAM G Bill represents the most far-reaching change to India’s rural employment guarantee framework since 2005 and is likely to spark intense debate over its fiscal impact, administrative feasibility and implications for rural livelihoods.
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