Sun Feb 01 13:50:31 UTC 2026: # New Rural Employment Scheme Falls Short of Promised Workdays Despite Increased Budget

The Story:

On February 1, 2026, the Union government announced an allocation of ₹95,692.31 crore for the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB–G RAM G) Act, 2025, a new rural employment scheme replacing the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005. While this represents an increase from previous allocations for MGNREGA, analysts project that the allocated funds are insufficient to meet the government’s stated goal of providing 125 workdays to all enrolled workers. The budget also set aside ₹30,000 crore for the MGNREGA to clear last financial year’s liabilities.

Despite the increased combined allocation, concerns are emerging about the scheme’s ability to deliver on its promises. Senior researcher Chakradhar Budhha from LibTech India estimates that to provide 125 days of employment to all active job card holders (approximately 8.65 crore), with an average cost of ₹355 per person per day, would require a total expenditure of ₹3,83,844 crore. The Union Rural Development Minister Shivraj Singh Chouhan hailed the budget as historic, citing a 21% hike in rural development allocation and increased funds to be received directly by panchayats.

Key Points:

  • ₹95,692.31 crore allocated to the new Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB–G RAM G) Act, 2025.
  • The VB–G RAM G Act replaces the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.
  • Allocation is projected to be insufficient to provide 125 workdays to all 8.65 crore active job card holders.
  • ₹30,000 crore allocated for MGNREGA to clear liabilities and cover ongoing expenditure.
  • Combined allocation for both schemes is ₹1,25,692.31 crore, a 43% increase from the Revised Estimate of ₹88,000 crore for MGNREGA in 2025-26.
  • The Union Rural Development Minister claims a 21% hike in allocation for rural development.

Critical Analysis:

The replacement of MGNREGA with VB–G RAM G, coupled with the insufficient funding relative to the promised workdays, suggests a potential shift in the government’s approach to rural employment. While the overall allocation for rural development has increased, the emphasis on new schemes and initiatives, such as the Lakhpati Didi program and SHE-Marts, could indicate a move towards promoting entrepreneurship and self-employment alongside wage labor. The simultaneous allocation to MGNREGA highlights a transitional phase.

Key Takeaways:

  • The new rural employment scheme faces challenges in meeting its stated objectives due to underfunding.
  • The government is signaling a possible shift towards a more diversified approach to rural development, incorporating entrepreneurship initiatives.
  • The transition from MGNREGA to VB–G RAM G is underway, but its effectiveness remains uncertain.
  • Budget allocation to panchayats may indicate focus on the decentralization of the rural economy.

Impact Analysis:

The effectiveness of the VB–G RAM G Act will heavily depend on how state governments implement the scheme and how the Centre balances wage employment with entrepreneurship programs. If the scheme fails to provide adequate employment opportunities, it could lead to increased rural distress, migration, and social unrest. On the other hand, if implemented successfully, it could boost rural incomes, improve infrastructure, and empower women through self-help groups. The success of the rural economy is critical to the nation.

Read More

Related News: