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The Union government has proposed a new employment guarantee Bill to replace the existing Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
The newly announced Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) or VB-G RAM G Bill, 2025 is expected to soon be introduced in the Lok Sabha.
The new Bill proposes to increase the guaranteed employment from 100 to 125 days in a year. While this provides increased employment opportunities, the draft bill also alters the fund-sharing pattern to a 60:40 Union-state sharing model, with the allocations to each state further subject to conditions imposed by the Union government.
This places an additional financial burden on states.
Under the existing MGNREGA funding pattern, the Union government was obliged to bear most of the costs – all wages for unskilled workers, up to 75% of material cost and wages of skilled, semi-skilled workers; and some administrative expenses. The state government had to pay the remaining 25% of material cost and skilled, semi-skilled workers’ wages, and also unemployment allowance (when work is not provided within 15 days of applying).
In the new Bill, a 90:10 fund-sharing pattern between the Union and state governments is retained only for the north-eastern states, and Himalayan states and Union Territories (Uttarakhand, Himachal Pradesh and Jammu and Kashmir).
For all other states and UTs with a legislature, the funds will be shared 60:40, with the state government bearing 40% of the financial burden. For UTs without a legislature, the Union government will bear the entire cost.
Moreover, the draft Bill lets the Union government decide allocation to states based on parameters set by the Union government itself. Any expense beyond this allocation will have to be borne by the state government.
“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. Any expenditure incurred by a State in excess of its normative allocation, shall be borne by the State Government in such manner and procedure as may be prescribed by the Central Government,” say Clauses 22 (4) and 22(5) of the draft Bill.
The draft Bill estimates the scheme to cost Rs 1.5 lakh crore a year, including wages, material cost and administrative cost. In this, it estimates the Union government’s share at around Rs 95,000 crore (63%), with the remainder to be met by state governments.
The decision to rename and replace MGNREGA has been met with criticism from the Opposition.
While the Opposition had earlier criticised the Union government for removing Gandhi’s name from the Bill, CPI(M) MP John Brittas said that “the real damage is deeper”.
“MGNREGA was a fully centrally funded one for unskilled wages; G RAM G downgrades it with States to bear 40%. States will now have to shell out around Rs. 50,000+ crore. Kerala alone will have to bear an additional 2,000–2,500 crore. This is the new federalism: States pay more, Centre walks away, yet claims the credit,” he said.
He also criticised the new Bill for suspending work for 60 days a year during peak agricultural seasons, to “facilitate adequate agricultural labour availability.”
“Employment guarantee or labour control? Stopping public works to push labour into private farms is not welfare - it is state-managed labour supply, stripping workers of wages, choice and dignity,” Brittas said.
Congress MLA from Karnataka Priyank Kharge had also earlier criticised the Union government for renaming the Bill, saying it would cause unnecessary clerical and administrative costs.
