MGNREGA Revamp Explained: Key features of VB-G RAM G Bill, how its different from earlier scheme

And, for the first time, the Bill proposes a 60-day pause in the scheme during the peak agricultural seasons of sowing and harvesting, a move said to be aimed at ensuring farm labour availability.

Here are the key changes the VB-G RAM G Bill proposes to the current rural job guarantee framework:

Guaranteed wage employment days

Section 5(1) of the VB-G Ram G Bill proposes 125 days of guaranteed employment to every rural household whose adult members volunteer to do unskilled manual work. While MGNREGS guarantees employment for 100 days, the number of families exhausting that work quota has been very limited owing to the large base of active workers.

In 2024-25, for instance, the average number of days of employment per household was just about 50.

In fact, the number of households completing 100 days stood at 40.70 lakh in the last financial year. In the current financial year, only 6.74 lakh families have hit the 100-day ceiling. The total number of job cards stands at 8.61 crore, covering 12.16 crore active workers.

Section 3(1) of MGNREGA provides for “not less than one hundred days” work per rural household in a financial year. But it has become the de facto upper limit as the scheme software does not allow data entries for employment above 100 days unless specifically requested by a state or a Union Territory.

The government, however, allows an additional 50 days of wage employment beyond the stipulated quota. For instance, every Scheduled Tribe household in a forest area is entitled to get 150 days’ work, provided that such families have no other private property except the land rights granted under the Forest Rights Act, 2016. Besides, the government, under Section 3(4) of MGNREGA, can also provide an additional 50 days of unskilled manual work in a year, over and above the 100-day limit in rural areas that are experiencing drought or any natural calamity.

States to share funding burden

One of the major changes the VB-G RAM G Bill proposes is in the fund-sharing pattern. Unlike MGNREGA, where the Centre pays the entire wage bill, states will have to share the wage payment burden under VB-G RAM G.

The Centre has proposed the new funding pattern at a time when the fiscal space for several states has been gradually shrinking. The implementation of the GST and the Centre’s increasing focus on different kinds of cess have constrained states’ revenue streams. State finances are already not in very good health, with several resorting to sops such as cash transfers, and facing mounting debt and committed liabilities including salaries, pensions, subsidies and interest payments.

The new funding pattern is expected to put an additional annual fiscal burden of around Rs 30,000 crore annually, according to a calculation of the last financial year’s (FY 2024-25) expenditure data.

VB-G RAM G Bill.

In FY25, the total MGNREGA expenditure was Rs 1.04 lakh crore, of which Rs 85,640.55 crore was released by the Centre. Of the total expenditure, the Centre paid the entire wage bill of Rs 73,337 crore.

And while Section 22(1) of the new Bill says calls it a “centrally sponsored scheme”, Section 22(2) states: “For the purposes of this Act, the fund-sharing pattern between the Central Government and the State Governments shall be 90:10 for the North Eastern States, Himalayan States and Union territory (Uttarakhand, Himachal Pradesh and Jammu and Kashmir) and 60:40 for all other States and Union territories with legislature.”

For Union territories without a legislature, the Union government shall bear the entire cost.

• Under the MGNREGA, the Union government pays
• The complete wage bill for unskilled manual work
• Up to three-fourths of the material cost of the scheme (including payment of wages to skilled and semi-skilled workers subject to the provisions of Schedule II)
• Such percentage of the total cost of the scheme as may be determined by the Union government towards the administrative expenses, which may include the salary and allowances of the programme officers and supporting staff, the administrative expenses of the central council, facilities to be provided under Schedule II and other items.

The state governments pay for:

• The cost of unemployment allowance
• One-fourth of the material cost of the scheme (including payment of wages to skilled and semi-skilled workers subject to the provisions of Schedule II);
• Administrative expenses of the state council.

‘Normative allocation’: Top-down approach

The new “normative allocation” formula transforms the method of allocation of resources into a purely top-down process. The Bill defines this as “the allocation of the fund made by the Central Government to the State”.

Section 4(5) of the VB-G RAM G Bill states: “The Central Government shall determine the state-wise normative allocation for each financial year, based on objective parameters as may be prescribed by the Central Government.”

Section 4(6) states: “Any expenditure incurred by a State in excess of its normative allocation shall be borne by the State Government in such manner and by such procedure as may be prescribed by the Central Government.”

Normative allocation would be a departure from the MGNREGA provision of the labour budget. Under the existing scheme, all states have to present their annual work plan and labour budget to the Union Ministry of Rural Development before the beginning of each financial year (on or before January 31). The labour budget is prepared at the district level on the basis of anticipated demand for unskilled manual work. It is aggregated at the level of the state government, which then approaches the Centre. The Centre then finalises the allocation.

This provision is likely to affect states that see a higher demand under the MGNREGS. In the last financial year (2024-25), 5.78 crore families (excluding West Bengal) availed the rural job guarantee scheme and among top five states seeing the highest demand were Tamil Nadu, Uttar Pradesh, Rajasthan, Bihar and Andhra Pradesh.

Pause in employment guarantee during agriculture season

The VB-G Ram G Bill introduces provisions for pausing the employment guarantee scheme for 60 days during sowing and harvesting to ensure “adequate agricultural labour availability”.

“Notwithstanding anything contained in this Act or rules made thereunder, and to facilitate adequate availability of agricultural labour during peak agricultural seasons, no work shall be commenced or executed under this Act,during such peak seasons as may be notified under sub-section (2),” states Section 6(1) of the VB-G RAM G-Bill.

States are to notify this 60-day period in advance. They may issue distinct notifications for different areas based on agro-climatic zones, local patterns of agricultural activities or other factors.

While the provision for pause may address the concerns over non-availability of labour for farm work, it effectively results in a shorter window to avail of the 125-day scheme. This provision is significant as India has a diverse agriculture calendar with crops varying from one region to another.

For instance, the sowing period of paddy during kharif season starts in May and continues till August. The harvesting takes place from September to January.

The sowing of wheat, which is the principal rabi crop, starts in October and continues till January. Harvesting takes place from February to June.

Viksit Gram Panchayat Plans

As per the provisions of the Bill, all works under the new scheme shall be originated from the Viksit Gram Panchayat Plans consolidated at the Block, District and State levels and further aggregated into the Viksit Bharat National Rural Infrastructure Stack, which shall comprise a comprehensive listing of works aligned with National development priorities.

The Viksit Bharat National Rural Infrastructure Stack shall encompass four thematic focus domains:

(a) Water security through water-related work

(b) Core rural infrastructure

(c) Livelihood-related infrastructure

(d) Works for the mitigation of extreme weather events

These plans will be integrated with the PM Gati Shakti National Master Plan.

Gramin Rozgar Guarantee Card to replace job cards

The VB-G RAM G Bill provides for issuance of Gramin Rozgar Guarantee Cards to an adult member of every rural household willing to undertake unskilled manual work. Such persons may submit the names, ages and address of the household to the Gram Panchayat within whose jurisdiction they reside, for the purpose of registration under the new job guarantee scheme.

It also has provisions for the issuance of Special Gramin Rozgar Guarantee Cards to single women, persons with disability, persons above sixty years; released bonded labourers; persons belonging to Particularly Vulnerable Tribal Groups; and transgender persons. The special card will have a distinct colour.

Unlike existing job cards which are valid for five years, the Gramin Rozgar Guarantee Card will be valid for three years, after which it may be renewed upon verification.

Higher penalty

Section 27 of the new Bill provides for a higher penalty for violation of its provisions. The penalty was earlier Rs 1,000; now it is proposed to be Rs 10,000.

Annual budget

For the current financial year, the government has allocated Rs 86,000 crore for MGNREGS. For the new scheme, the Rural Development Ministry estimates the annual requirement of funds on wage, material and administrative components at Rs 1,51,282 crore, including the state share. “Of this, the estimated central share is Rs 95,692.31 crore,” it said.