Relevance: GS-2 (Governance, Welfare Schemes), GS-3 (Rural Development) • Source: The Hindu, PIB

Key Takeaways

  • VB-GRAM alters MGNREGA from a rights-based guarantee → budget-led employment scheme.
  • States’ fiscal burden rises sharply (up to 40% share).
  • Distress-time employment may decline due to budget caps and seasonal pauses.
  • Reforms must protect the entitlement while improving quality and efficiency.

News 

The Government proposes replacing MGNREGA with the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-GRAM). The new framework moves from a rights-based, demand-driven guarantee to a supply-driven employment model, while raising States’ fiscal responsibility.

About MGNREGA

  • Mahatma Gandhi National Rural Employment Guarantee Act: Enacted in 2005 as the world’s largest rights-based employment programme.
  • Guarantees 100 days of unskilled work on demand—critical for drought-hit, migrant, and landless households.
  • Ensures wage security, women’s participation (50%+ in many States), and distress-migration reduction.
  • Decentralised planning via Gram Sabhas; transparency via NMMS and social audits.
  • Unskilled Labour Wages: The Central Government bears 100% of the wage costs for unskilled manual workers.
  • Material Costs & Skilled Wages: The costs for materials, as well as the wages of skilled and semi-skilled workers, are shared between the Centre and State in a 75:25 ratio, respectively.

The VB-GRAM Bill: The Major Changes

  1. Demand-to-supply shift: MGNREGA’s legal entitlement → replaced by fixed, centrally decided allocations, removing the universal guarantee.
  2. Increased workdays: Guarantee rises from 100 → 125 days, but linked to budget caps, not citizen demand.
  3. Higher State burden: State expenditure share rises from 10% → up to 40%, creating fiscal strain, especially for poorer States.
  4. Targeted geography: Work available only in notified rural areas, risking exclusion of rainfed, tribal, and backward regions.
  5. Seasonal pause: Allows halting work during “low-demand” periods—contradictory to distress-based livelihood needs.

Implications of the Bill

Positive

  • Increased days of work.
  • Structured livelihood planning aligned with long-term rural development.

Concerns

  • Loss of legal guarantee weakens the safety net for the poorest.
  • Budget caps may reduce employment in years of drought, migration surges, or rural distress.
  • States may struggle to bear higher costs as there is uneven implementation across India.
  • Risk of exclusion of vulnerable communities, especially tribal and rainfed belts.
  • Could undermine women’s financial independence which MGNREGA strengthened.
  • Dilutes decentralisation by shifting authority from Gram Sabhas to the Centre.

Need to Reform MGNREGA Without Breaking Its Core

  • Upgrade asset quality: climate-resilient works, watershed, soil-water conservation.
  • Restore timely wage payments; align wages with state minimum wages.
  • Improve NREGA portal reliability, better payment systems, and regular social audits.
  • Integrate MGNREGA with local skilling, MSMEs, and farm-value chains.
  • Preserve the rights-based entitlement, which is central for livelihood security.

VB-GRAM seeks rural transformation but risks weakening India’s most dependable social protection guarantee unless reforms remain people-first and rights-conscious.

UPSC Value Box 

Why this issue matters?

  • MGNREGA remains the lifeline for rural poor, especially women, small farmers, and migrant households.
  • The Bill reshapes the federal fiscal balance, livelihood security, and the nature of welfare rights in India.

Analytical Insight: Shifting to a supply-driven model may improve planning, but reduces autonomy of households to seek work during distress, weakening India’s most important social protection pillar.

Reform / Way Forward: Preserve the legal right to demand work, while improving planning, asset quality, transparency, and digital systems—balancing efficiency with equity.

Q. “Critically analyse how the VB-GRAM Bill modifies the foundational structure of MGNREGA and assess its implications for rural livelihoods and cooperative federalism.”

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