G RAM G — A rural reform that aims to deliver, not just spend

The redesign of India's rural employment guarantee under the Viksit Bharat-Gramin Rozgar and Aajeevika Mission (VB-G RAM G) marks the most substantial recalibration of the programme since its inception in 2006. While the debate has primarily centred on legacy and symbolism, the reform is better understood as a response to persistent structural weaknesses that had emerged over nearly two decades of implementation: weak planning incentives, fiscal unpredictability, and uneven asset outcomes.

The fiscal scale of the programme itself underscores this context. Since its inception, cumulative expenditure under MGNREGA has approached INR 10 lakh crore, with nearly four-fifths of total spending incurred between FY15 and FY25 alone. Despite this scale, outcomes remained constrained. Average employment per household rarely exceeded 44-50 days in recent years, depending on the year, far below the statutory guarantee of 100 days. Parliamentary submissions and Standing Committee deliberations in late 2025 revealed that only 7-8 per cent of households completed the full 100 days in the last three fiscal years.

This gap between promise and delivery is the central context for the current reform. A persistent shortfall between work demanded and work provided became a structural feature of the scheme. The problem was not a lack of fiscal commitment, since budget allocations were routinely revised upwards, but the absence of predictability. Since FY15, revised estimates have consistently exceeded or equalled budget estimates, resulting in additional spending of approximately ?1.6 lakh crore beyond what Parliament initially approved. In practice, this open-ended fiscal architecture weakened planning, delayed wage payments, and encouraged a reactive rather than anticipatory approach to rural employment.

VB-G RAM G responds by changing the rules of the game. The increase in guaranteed employment from 100 to 125 days is significant; however, the more consequential shift lies in the funding design. For most states, the Centre-state cost-sharing ratio shifts to 60:40, while the North-Eastern states, Himalayan states, and Union Territories retain the 90:10 structure. Far from signalling withdrawal, this transition seeks to replace discretionary expansion with predictability. The FY26 allocation of INR 86,000 crore, the highest ever, underscores continued fiscal commitment by the Centre. At the same time, projections suggest that central assistance will rise even further, towards INR 95,000-96,000 crore, as the new framework is implemented.

This change alters the programme's political economy. The changes are not in the quantum of support, but in its distribution and discipline. SBI Research reports that, taken together, states would receive roughly INR 17,000 crore more than their average allocations over the last seven years, although gains and losses vary across states. Larger states with higher administrative capacity and demonstrable demand emerge as net beneficiaries. This redistribution mechanism restores an element of accountability to a programme long insulated from hard budget constraints.

The reform's second pillar is a sharper focus on asset creation. Since the start of the programme, nearly 9.6 crore assets have been created. Yet quantity often outpaced quality. VB-G RAM G narrows the scope of permissible works into four defined categories: water security, core rural infrastructure, livelihood-related infrastructure, and climate-resilient assets, and integrates village plans with PM Gati-Shakti. The intention is to convert wage employment from a purely consumptive transfer into a tool for long-term rural productivity.

Operational refinements reflect similar realism. The introduction of a 60-day pause during peak sowing and harvesting seasons acknowledges that rural labour markets are seasonal and that public works should not compete with agricultural operations.

Earlier programme design often ignored this interaction, potentially depressing participation during peak farm periods. District-level flexibility under the new framework is intended to ensure that employment complements, rather than distorts, local labour demand.

Governance reforms are central to restoring credibility. While officially recorded misappropriation since FY16, amounting to around INR 292 crore, is small relative to total outlays, inefficiencies have had larger consequences. Audit findings and administrative reviews identified ghost entries, delayed payments, and inadequate asset monitoring, resulting in substantial lost employment opportunities. The new framework mandates biometric authentication, spatially enabled planning, digital tracking, and regular public disclosure. These measures coincide with demonstrable improvements: by March 2025, nearly 98 per cent of fund transfer orders were generated on time, and Aadhaar-based payment systems covered almost all active workers.

Distributional outcomes remain broadly intact. Data from the Ministry of Rural Development and the Economic Survey 2024-25 show that women account for nearly 58 per cent of person-days in FY25, up from under 50 per cent in the programme's early years. Scheduled Castes and Scheduled Tribes continue to contribute approximately 37 per cent of the total person-days.

There are, nonetheless, frictions. Wage compliance gaps persist, with notified rates in some states significantly exceeding actual payments, dampening worker demand. The unemployment allowance has functioned mainly as a notional safeguard. Between FY21 and FY25, barely ?41 lakh was paid across the country, indicating that state administrations have systematically avoided situations that would trigger this liability, preferring adjustments in work allocation to formal acknowledgement of failure.VB-G RAM G, therefore, is neither a dilution nor an expansion in the conventional sense. It is a recalibration-one that accepts the fiscal and administrative limits exposed by nearly twenty years of experience.

By tying employment more closely to planning, assets, and accountability, the State is attempting to make rural employment guarantees sustainable rather than episodic. Whether this ambition is realised will depend less on statutory promises and more on execution at the state and local levels. But as a statement of policy intent, the reform reflects a clear recognition: welfare that endures must be designed to deliver, not merely to spend.

The writer is a Professor of Finance and PT Member EAC-PM; views are personal