The Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB-G RAM G) scraps MGNREGA amid opposition outcry, promising 125 workdays, timely wages, and reforms. However, it slams states with heavier finances through a 60-40 Centre-state split for general states (10% for hilly/North-East) across all costs—wages, materials, admin. Plus, fixed “normative allocations” force states to foot extras.
This revamp reallocates risk downward, straining budgets already choked by salaries and debt.
MGNREGA vs VB-G RAM G: Cost Shift Breakdown
MGNREGA shielded states: Centre paid 100% wages, 75% materials, 6% admin. VB-G RAM G equalizes at 40% state share everywhere.
FY25 saw Rs 1.19 lakh crore total spend (Rs 86K crore Centre budget + state extras + liabilities). 5.78 crore households (38% registered) averaged 50 days.
Under VB-G RAM G rules, states (excl. West Bengal) face Rs 41,494 crore on wages/materials alone—up from Rs 10,120 crore (4X jump). Wages alone: Rs 26,000+ crore hit.
Kerala, Jharkhand, Tamil Nadu suffer most; Haryana, Rajasthan least. Hilly states gain on materials (10% vs 25%, saving Rs 610 crore total).
| Cost Component | MGNREGA State Share (FY25) | VB-G RAM G Est. (FY25) | Increase |
| Wages | Rs 0 | Rs 26,000+ crore | New |
| Materials | Rs 10,120 crore total | Rs 14,676 crore total | +45% |
| Total (ex-WB) | Rs 10,120 crore | Rs 41,494 crore | +310% |
States Under Siege: Debt and Committed Spending
States grapple moderate revenue growth and high debt. Committed costs (salaries, pensions, interest) devour budgets: Kerala (69%), Tamil Nadu (61%), Rajasthan (54%) in FY26.
Extra Rs 1,200-3,000 crore per program rivals health/education outlays in poorer states. Borrowings fill gaps—Punjab (52% receipts), Jharkhand (14%).
Question: Can states handle 125 days? Demand surges (like COVID FY21: Rs 1.11 lakh crore) now risk state collapse post-normative cap.
125-Day Promise: Guarantee or Aspiration?
VB-G RAM G eyes 125 days, doubling FY25’s Rs 1.25 lakh crore FY27 allocation if scaled. States fund overflows, capping access in distress.
Even conservative FY25 math (50 days, old wages) quadruples costs. Full rollout demands Centre hikes or state cuts elsewhere—echoing XVI Finance Commission’s 41-50% devolution plea amid cess squeezes.
Regional Winners and Losers
High Burden States: Kerala (Rs 1,243 crore wages, 66 days/household), Tamil Nadu (Rs 3,350 crore), Jharkhand.
Low Impact: Haryana, Rajasthan, Telangana, UP.
Relief Zone: North-East/hilly (material savings).
This pre-commits fiscal space sans transfer boosts, turning “guarantee” conditional.
Q&A: Fiscal Traps Exposed
Q: Why the opposition fury over repeal?
A: MGNREGA buffered states; VB-G RAM G dumps risk amid rural distress.
Q: How does normative allocation work?
A: Centre sets yearly caps via “objective parameters”; states pay beyond.
Q: Impact on 125-day expansion?
A: States finance surges or ration jobs—Covid-like spikes become unaffordable.
Q: Any state winners?
A: Hilly areas cut material costs 60%; general states face uniform hikes.
FAQ
What triggered MGNREGA protests?
Opposition decries eroded safety net; states fear bankruptcy from cost shifts.
Can states borrow to cover gaps?
Yes, but debt loads (Punjab 52%) risk spirals, crowding social spending.
Will Centre adjust allocations?
Unclear—XVI FC pushes higher devolution; VB-G RAM G locks state shares.
How does this hit rural poor?
Capped work in distress risks job denial, undermining entitlement core.
VB-G RAM G innovates but fiscal math alarms. States demand funding clarity as rural needs mount. Watch Finance Commission fallout.