By Dr BP Maithani
Promoting rural employment has been in the forefront of our two-pronged rural poverty alleviation strategy of self-employment and wage employment for nearly five decades. Starting with small farmers and agricultural labourers, development and food for work programmes during the early seventies, the two streams of Garibi Hatao paradigm have been flowing side by side assuming different names and forms over the years. The last coinages were National Rural Livelihood Mission (NRLM) for self-employment component which continues till date and Mahatama Gandhi National Rural Employment Guarantee Act (MGNREGA) for the wage employment programme which was reformed and rechristened as VB-G RAM G Act recently. It will be observed that while self-employment stream, that is NLRM reformulated in 2010 remained as a centrally sponsored scheme with 60:40 cost sharing arrangement between the Centre and the States, the wage employment component was fortified as a Central Act in 2005 to guarantee 100 days of wage employment per family in a year for those registered as wage earners with a job card. It became a central sector scheme where the entire cost on wages of unskilled labour and 75 percent cost of material and skilled labour of the projects was borne by the Centre with the State sharing only 25 percent cost of material and skilled labour plus unemployment allowance if the job could not be provided to the card holder within 15 days of the demand. Under MGNREGA rural employment was conceived as a right and a guarantee with the primary financial responsibility cast on the central government.
Evidently, the emphasis was on providing guaranteed 100 days of work to unskilled labourers constituting the poorest of the poor. The guidelines clearly stated that 60 percent of the cost of the project should be spent on wages of unskilled labourers and only 40 percent cost to be spent on materials and wages of the skilled labourers. Of course the guidelines did provide for creating durable assets in the process but given the design of the scheme it was hardly possible to create assets in the strict sense of the term. Coupled with low wage rates, MGNREGA, became more of a dole type activity distributing money to the families at one’s sweet will. Moreover, though the budgeting of MGNREGA was anchored on number of man days projected by the village Panchayats based on the number of job card holders in the villages, in practice, as revealed by numerous evaluation studies, on an average only about 50 days of work was actually provided to the families possessing the job cards even though on paper they were shown as having received full 100 days of employment. A large number of over age persons, 60 years and above, though registered and provided job cards, worked as proxy and cushion for those engaged at market wage rates. Interestingly, the clause of providing unemployment allowance to workers was not invoked even though in most cases the actual employment created was much less than the 100 days of legal right envisaged in the scheme.
So, in spite of legal entitlement the jobs created were much less than budgeted. Less in the sense that only few workers got 100 days of employment and majority had to contend with ten to forty days depending on who the beneficiary was and his/her equations with the Pradhans. In the villages usually, every household got registered as wage earner whether or not one was eligible, meaning below poverty line or not. This happened because the programme guideline did not specify that only BPL families should be covered. It, instead, mentioned that families willing to work as wage earner should be registered. This loop hole created the scope for manipulation by the Pradhans to oblige even such persons who would not be otherwise eligible to benefit from the scheme. Muster rolls are easily fuzzed to inflate man days of employment created on paper and adjust deviations from the guidelines. This bred rampant corruption. Another weakness of MGNREGA was that it prescribed a common guideline for implementation of the schemes all over the country in spite of widely varying objective conditions in different states and parts of the country.
For example, in the mountain regions such as Uttarakhand and other Himalayan states, population is scarce and there is acute shortage of manpower for working as wage earners. Mostly migrant workers are engaged for construction and farm works. The demand supply equation favours the workers. The market wage rates are much higher than the prescribed minimum wages. Construction and creation of durable assets require much more material and skill inputs to sustain the vagaries of nature. In such a scenario, the basic premise on which MGNREGA is formulated becomes questionable. MGNREGA suits the conditions where there is acute poverty and unemployment of unskilled workers because of high population density and landlessness. Where market wage rates are lower than government prescribed wage rates, demand supply equation favours the contractors or the landlords and not the unorganised workers. So, there should have been flexibility in the guidelines allowing adaptation at the State and district levels suiting local conditions. In the absence of the desired flexibility, MGNREGA, no doubt a land mark legislation offering a demand driven legal right to employment, was in practice, implemented more on paper than on the ground.
Given these infirmities, reform of MGNREGA should be welcomed. But the way it has been done by the government has raised eyebrows even of the observers not politically aligned. It appears that the government was obsessed with erasing the “Gandhi” word and struggled to find a suitable substitute for Gandhi in the title. It therefore, first chose to call it “Poojya Bapu Grameen Rojgar Gaurantee Yojana but, on second thought aligning with cherished new India vision, preferred to name it as Viksit Bharat Guarantee for RoZgar and Aajeevika Mission (Grameen) Act or in short VB G-RAM-G Act. It replaces MGNREGA with a new statuary framework aligned with Viksit Bharat 2047 in which employment guarantee is enhanced to 125 days vis a vis 100 days in MGNREGA. It also links employment creation with the development of durable rural infrastructure across four verticals viz (1) Water related works, (2) Livelihood related works (3) Core rural infrastructure and (4) Special works for disaster prevention. The shift is markedly on generating employment in the creation of durable rural infrastructure rather than on any dig and fill type work for distributing wages. There is freedom to formulate a shelf of projects from among the above mentioned four categories which are in sync with other development activities in the area. This is evident also from the fact that there is no insistence on spending 60 percent cost of the project on wages of unskilled labour and leaving only 40 percent to be spent on materials and skilled labour as in MGNREGA.
As stated above, VB G-RAM (G) is a centrally sponsored scheme with 60:40 percent fund sharing arrangement between the centre and the states respectively, unlike MGNREGA which was wholly a Central scheme with states sharing barely 10 percent of the cost. However, in the special category Himalayan states, cost sharing remains the same i.e. 90:10 percent. This shift in standard funding pattern of centrally sponsored programmes casts predictability on centre-state partnership and enhances accountability of the states in programme implementation. This change in funding pattern has been severely criticised by opposition parties as, in their opinion, it places additional burden on already financially over stretched state governments by diluting the spirit of employment guarantee in the programme. The opposition parties also claim that MGNREGA had captured worldwide attention for its innovative design which generated over two billion persons days of work annually for some fifty million households. Dismantling it would therefore be a historic error. It is also said that the shift is not only a change in budgetary practice, but also a change in statutory mandate because the state governments may not be able to deploy the resources required to meet the demand for employment. This way, the right to work is eroded through fiscal constraints making access to employment contingent on state capacity rather than legal entitlement. MGNREGA was undoubtedly an innovative employment safety net, but it is also true that chronic under funding and payment delays had long hampered its implementation. Further, MGNREGA often prioritised short term wage distribution over durable outcomes.
There is a view that over time the structure and aspirations of rural India have evolved significantly. Rising income, expanded connectivity, widespread digital penetration and diversified livelihood opportunities have altered the nature of rural employment scenario in the country. The country has lifted 171 million persons out of extreme poverty between 2011-12 and 2022-23. The World Bank 2025 report stated that extreme poverty of under $ 2.15 per day income in India dropped to around 2.3 percent by December 2025 and using updated $ 3 per day income line, it was about 5.3 percent. Thus, under the changed circumstances, the rural poor now cannot be construed as belonging to hewer of wood and drawer of water category. Thus, VB G RAM (G) Act besides continuing to provide employment safety net to rural poor, by combining employment, skill and infrastructure development represents a forward looking evolution of the employment guarantee scheme. Much however will depend on the capacity of the state government and its grassroots institutions to make the best of the opportunity offered by the new employment guarantee Act. Now the focus should be on strengthening and capacity building of the Panchayat Raj Institutions.
(The author is a rural development specialist. Views expressed are personal.)
