Relevance: GS-2 (Governance, Constitution, Social Justice), GS-3 (Rural Economy, Employment, Inclusive Growth)
Source: The Hindu

News and Context

The Parliament  passed the Viksit Bharat–GRAM Bill, 2025 replacing the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). 

This signals a fundamental shift from a rights-based, demand-driven employment guarantee to a centrally designed, allocation-based welfare framework, raising serious constitutional, federal and socio-economic concerns at a time of persistent rural distress.

MGNREGA: Constitutional Ethos and Economic Role

MGNREGA derives its normative strength from Article 41 of the Directive Principles of State Policy, which enjoins the State to secure the right to work within its economic capacity. 

During the Constituent Assembly debates, Dr. B.R. Ambedkar viewed such principles as essential for achieving substantive equality and economic democracy, especially for the rural poor.

Distinctive features of MGNREGA include:

• Legal entitlement to 100 days of wage employment per rural household
• Demand-driven architecture, making employment a citizen’s right rather than State discretion
• Decentralised planning and execution through Panchayati Raj Institutions
• Gender justice, with equal statutory wages for women
• Counter-cyclical function, acting as a safety net during droughts, agrarian distress and economic shocks

Thus, MGNREGA is not merely a welfare scheme but a constitutional instrument of livelihood security and labour empowerment.

What the Proposed Bill Changes

The draft Bill reportedly introduces:

• Normative financial ceilings, replacing demand-based employment guarantees
• Recentralisation of decision-making, diluting Panchayat autonomy
• Weakening of legal enforceability and unemployment allowance
• Restrictions on employment during agricultural peak seasons, when fallback income is most needed

This marks a transition from rights-based governance to administrative discretion, fundamentally altering the social contract between the State and rural workers.

Impact on Vulnerable Groups and Rural Labour Markets

MGNREGA workers are disproportionately from Scheduled Castes, Scheduled Tribes and other marginalised communities, with women constituting a large share of the workforce. Dilution may result in:

• Reduced bargaining power of rural labour
• Greater exposure to exploitative informal employment
• Intensification of gendered and caste-based inequalities
• Increased distress migration to urban areas

Despite consistently high demand for work, MGNREGA allocations have declined as a share of GDP, weakening its capacity as a rural stabiliser.

Broader Governance and Social Implications

Curtailing MGNREGA undermines the spirit of the Directive Principles, weakens decentralised governance, and risks reversing gains in poverty reduction, social stability and rural resilience. At a time when inclusive growth is a stated national goal, dismantling a proven safety net may deepen agrarian distress and social unrest.

Weakening MGNREGA risks converting the constitutional promise of the right to work into a fragile, discretionary welfare provision.

Q. “Examine how the proposed dilution of MGNREGA affects rural livelihoods, decentralised governance and the Directive Principles of State Policy.”