The Employment Guarantee in Limbo
Governance · Wednesday, 19 August 2026
Economist Jean Drèze highlighted a sharp contraction in rural employment during the transition from MGNREGA to the VB-G RAM G Act 2025. April–July 2026 generated only 70 crore person-days, a 43% drop from previous years, due to delayed rules, 60:40 cost sharing and digital compliance barriers.
Quick highlights
- April–July 2026: only 70 crore person-days generated, 43% lower than 2024-25 average of 128 crore.
- July 2026: 8.3–9 crore person-days, over 40% decline from July 2025.
- In 10 of 19 major states including UP, MP and Jharkhand, work generation declined 60-85%.
- Union Budget 2026-27 allocated ₹95,692 crore (total outlay ~₹1.5 lakh crore with state share).
- Act expands guarantee from 100 to 125 days but rules were notified only in June 2026.
- Shift to 60:40 cost sharing, facial recognition mandates and pre-fixed ceilings stalled implementation.
Context
Economist Jean Drèze highlighted a sharp contraction in rural employment generation during the transition from the repealed Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 to the new Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Act, 2025.
Key Facts
April–July 2026 generated only 70 crore person-days (43% drop from 2024-25 average). July 2026 saw 8.3–9 crore person-days, over 40% lower than July 2025. Ten of 19 major states recorded 60-85% decline. Budget allocation ₹95,692 crore (total ~₹1.5 lakh crore). Rules finalised end-June 2026 after Act passage in December 2025. Shift from demand-driven to pre-fixed allocations and mandatory biometrics cited as reasons.
Significance
The transition was meant to expand guaranteed days to 125 and create durable assets. However, administrative delays and fiscal frictions have temporarily stalled rural safety nets exactly when agricultural slack season demand peaks, affecting poorest households.
Challenges / Way Forward
Challenges: delayed rule-making, 60:40 cost-sharing burden on states, facial recognition barriers in remote areas, pre-fixed ceilings suppressing work. Way forward: dedicated state revolving fund, offline verification alternatives, treat allocations as indicative not rigid caps, capacity building for gram panchayats, regular social audits and enforcement of unemployment allowance.
Exam Angle
GS Paper II – Governance: welfare schemes, centre-state fiscal relations. Mains: Examine structural changes in VB-G RAM G Act vs MGNREGA and their implications for rural employment security. Prelims: person-days data, 60:40 split, demand-driven vs normative allocation.
Remember this
- VB-G RAM G Act, 2025 replaces MGNREGA and expands guarantee to 125 days.
- April–July 2026: 70 crore person-days generated (43% decline).
- July 2026 performance: 8.3–9 crore person-days (>40% drop).
- Budget 2026-27: ₹95,692 crore allocation (total outlay ~₹1.5 lakh crore).
- Rules finalised end-June 2026 after December 2025 passage.
- New model shifts from pure demand-driven to pre-fixed state allocations.
- Jean Drèze highlighted the contraction in rural employment.