Parliament passed the VB-GRAMG Bill on December 16, with the Rajya Sabha clearing it in the early hours of December 19 after a heated debate. (Representational Image)
VB-GRAMG Act 2025: President Droupadi Murmu on December 21 gave assent to the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, formally replacing the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The new law increases the statutory rural employment guarantee from 100 to 125 days per household per year and introduces major changes in funding, planning and governance under the government’s Viksit Bharat 2047 framework.
Parliament passed the VB-GRAMG Bill on December 16, with the Rajya Sabha clearing it in the early hours of December 19 after a heated debate. However, the legislation has drawn sharp criticism from Opposition parties over the removal of Mahatma Gandhi’s name and the shift from demand-based funding to normative allocations with a 60:40 Centre–state cost-sharing arrangement.
VB-GRAMG Act: Key provisions
The Act guarantees 125 days of wage employment per financial year to rural households whose adult members volunteer for unskilled manual work, a 25 per cent increase over MGNREGA’s 100-day guarantee, according to an official government statement.
Workers will receive wages weekly or within a fortnight after completing work. Delays beyond this attract compensation as specified in the Act’s schedule.
A key feature is an aggregated 60-day no-work period during peak agricultural seasons. States must notify these periods in advance to ensure farm labour availability during sowing and harvesting. Workers retain their 125-day entitlement within the remaining 305 days.
All employment is organised across four thematic verticals: water security works, core rural infrastructure, livelihood-related infrastructure, and special works to mitigate extreme weather events. The assets created are integrated into the Viksit Bharat National Rural Infrastructure Stack, the government stated.
Planning is decentralised through Viksit Gram Panchayat Plans, prepared locally and integrated with national digital platforms including PM Gati Shakti.
What is the new funding model?
The VB-GRAMG Act shifts from a central sector scheme to a centrally sponsored scheme, meaning the Centre and states will now share the financial responsibility. The cost-sharing pattern is:
- 60:40 between the Centre and states for most states
- 90:10 for North-Eastern and Himalayan states
- 100 per cent central funding for Union Territories without legislatures
The total estimated annual funding requirement is Rs 1,51,282 crore, including state contributions. Of this, the Centre’s share is projected at Rs 95,692.31 crore, according to an official government statement.
Under the new system, funding will move from a demand-based approach to fixed allocations based on clear criteria. This change is expected to make budgeting more predictable while continuing to guarantee employment as mandated by law.
The ceiling on administrative expenditure has also been increased from 6 per cent to 9 per cent, allowing more resources for staffing, training, and technical capacity, the statement added.
Unemployment allowance: How it works
If work is not provided within 15 days of demand, an unemployment allowance becomes payable, with the responsibility resting on state governments. The rates and conditions will be set through official rules.
According to the government document, the Act removes earlier provisions that denied eligibility and restores the unemployment allowance as a meaningful legal safeguard, protecting workers when employment cannot be provided.
Why the Opposition is protesting
The bill triggered widespread protests in Parliament. Opposition members, including Congress leaders Priyanka Gandhi Vadra and Samajwadi Party chief Akhilesh Yadav protested at the Mahatma Gandhi statue, holding placards and demanding withdrawal.
Removal of Gandhi’s name: West Bengal Chief Minister Mamata Banerjee called the name change “a matter of deep shame”. She announced West Bengal will rename its Karmashree project after Mahatma Gandhi. Congress Parliamentary Chairperson Sonia Gandhi described the legislation as a “black law”, alleging the government bulldozed MGNREGA without adequate discussion.
Funding model concerns: Tamil Nadu Chief Minister M.K. Stalin raised strong objections, arguing the 60:40 cost-sharing arrangement places a significant financial burden on states. Congress leader Rahul Gandhi criticised the VB-GRAMG bill as “anti-state and anti-village by design”, accusing the government of turning the employment guarantee into a “rationed scheme controlled from Delhi”.
Rights-based guarantee diluted: Senior advocate Prashant Bhushan accused the central government of “practically ending MGNREGA” by converting it from a rights-based, demand-driven scheme into a discretionary, budget-dependent grant mechanism. Congress leader Jairam Ramesh said the “fundamental character of MGNREGA has been changed” and employment opportunities for rural sections have been taken away.
The government’s defence
Union Agriculture Minister Shivraj Singh Chouhan defended the VB-GRAMG bill, stating Mahatma Gandhi is an “ideal and inspiration” for the government. He dismissed opposition charges as politically motivated and emphasised the Act provides a complete guarantee of employment.
Chouhan highlighted that the Act increases guaranteed employment from 100 to 125 days and includes provisions for additional payment if wages are delayed. He stated the proposed annual allocation exceeds Rs 1,51,282 crore.
Union Minister Pralhad Joshi described the Act as “the most progressive bill”, stating it brings transparency, improves rural infrastructure, supports higher employment and helps reverse migration.
Former NITI Aayog CEO Amitabh Kant defended the VB-GRAMG Act, arguing MGNREGA was designed for a “very different rural economy in 2005”. He stated the new Act reflects how rural India, labour markets and governance capacity have structurally changed. The shift from relief to productive employment aligns with rural development goals, he said.
BJP IT cell head Amit Malviya rejected Sonia Gandhi’s criticism, stating her arguments reflected “poor understanding of the legislation”.
MGNREGA’s track record: Numbers and challenges
MGNREGA, enacted in 2005, provided employment to 5.99 crore households in 2023-24, according to the Ministry of Rural Development’s MGNREGA dashboard. However, the number of individuals employed declined from 8.75 crore in 2022-23 to 8.34 crore in 2023-24, falling further to 7.88 crore in 2024-25 and 6.37 crore so far in 2025-26, the lowest since the 2020-21 Covid pandemic year.
Around 308.66 crore persondays of employment were generated in 2023-24, up from 293.70 crore in 2022-23, a 5 per cent increase, official data show.
Women’s participation rose from 48 per cent in 2013-14 to 56.78 per cent in 2025-26. Nearly 99.3 per cent of 13.18 crore active workers now have Aadhaar linkage for electronic payments via the Aadhaar-Based Payment System, according to government data. Government rules clearly ban denying work over ABPS issues.
Despite these gains, implementation challenges persisted. The government document noted monitoring across states revealed work not found on the ground, expenditure not matching physical progress, use of machines in labour-intensive works, and bypassing of digital attendance systems.
Only a small proportion completed the full 100 days. In Andhra Pradesh, 864,373 households completed 100 days in 2020-21, dropping to 60,654 in 2022-23 before rising to 277,998 in 2023-24, according to official data.
Budget allocation and fund shortages
MGNREGA’s budget allocation has remained stagnant at Rs 86,000 crore for three consecutive years from 2023-24 to 2025-26, despite being legally demand-driven.
In 2023-24, the initial allocation was Rs 60,000 crore but actual expenditure rose to over Rs 1.05 lakh crore after additional funds were provided, official data show. In 2024-25, allocation stood at Rs 86,000 crore while spending crossed Rs 1.04 lakh crore.
For 2025-26, expenditure had already reached Rs 64,118 crore by December 25, with the financial year still in progress, according to the official dashboard data.
During the Covid-19 pandemic in 2020-21, expenditure peaked at Rs 1.11 lakh crore against a budget allocation of Rs 61,500 crore, underlining the scheme’s role in supporting returning migrants, the Ministry stated. In 2022-23, spending reached Rs 90,810 crore compared with a Budget Estimate of Rs 73,000 crore.
Researchers note that after adjusting for inflation, the 2024-25 allocation represents a real decline compared to recent years. World Bank-linked assessments suggest MGNREGA spending should be around 1.6-1.7 per cent of GDP, while current allocations are about 0.26 per cent of GDP, according to the Ministry of Rural Development.
Regional variations in implementation
State-wise data show uneven utilisation. In 2023-24, Tamil Nadu, with less than 1 per cent of India’s poor population, accounted for about 15 per cent of MGNREGA expenditure, according to official data. Kerala, with around 0.1 per cent, used about 4 per cent. By contrast, Bihar and Uttar Pradesh, which together account for around 45 per cent of the poor, used only 11 per cent of funds.
West Bengal has faced a funding halt since March 2022 when the Ministry of Rural Development invoked Section 27 of MGNREGA over corruption allegations and non-compliance issues. No new funds flow until Rs 6,200 crore in alleged misuse is recovered, according to official sources.
The Parliamentary Standing Committee on Rural Development has repeatedly flagged fund shortages and delayed releases as major obstacles, warning they lead to wage payment delays and disrupt programme continuity.
Why did the government say reform was needed?
The government said the need for reform goes beyond administrative issues. According to World Bank data, extreme poverty in India fell from 27.1% in 2011–12 to 5.3% in 2022–23, while rural poverty declined from 64.9% to 27.7% during the same period.
It noted that rising incomes, better connectivity, widespread digital access, and more diverse livelihood options have changed rural employment needs. In this context, the open-ended, demand-driven structure of MGNREGA is seen as no longer fully suited to present-day rural conditions.
Audits by the Comptroller and Auditor General and several independent studies found that MGNREGA usage was often lowest in the poorest states and districts, while relatively better-off states received a larger share of funds. Former NITI Aayog CEO Amitabh Kant observed that the scheme’s original assumption of “self-targeting” weakened over time, reducing its effectiveness in reaching the most vulnerable.
How will farmers and workers benefit?
According to the government, the 60-day seasonal pause will help ensure enough labour is available during peak farming periods. This is expected to ease farmers’ concerns about rising wages and labour shortages during critical agricultural operations. Farmers will also benefit from better irrigation, storage, and rural connectivity created through infrastructure projects.
Workers, on the other hand, will benefit from the opportunity to work up to 125 days a year instead of 100, leading to higher potential earnings. Work schedules will be more predictable, based on village-level planning. Secure digital wage payments and the creation of useful local assets will further improve their livelihoods. In addition, a higher unemployment allowance will provide extra income security when work is not available.
What are the transparency measures?
VB-GRAMG Act equips the central government with enforcement powers to investigate complaints, suspend fund releases where serious irregularities are detected, and direct corrective measures, according to the legislation.
It enables the use of artificial intelligence and biometric authentication to identify irregularities, supported by GPS- and mobile-based real-time monitoring. Real-time Management Information System dashboards and weekly public disclosures are mandated, according to official government documents.
Social audits are mandated at least twice every six months for every Gram Panchayat, reinforcing community oversight. Gram Sabhas receive access to all records for conducting audits.
The Act establishes Central and State Gramin Rozgar Guarantee Councils for policy guidance and National and State Steering Committees for strategic direction, according to the official framework. Panchayati Raj Institutions lead planning, with Gram Panchayats implementing at least half of works by cost.
What comes next
VB-GRAMG Act has received presidential assent and has been notified. State governments will operationalise the scheme in line with the provisions of the Act. As it is a centrally sponsored scheme, implementation will require state-level notification and coordination. Detailed rules covering the composition of councils, allocation norms, unemployment allowance rates, and other operational aspects will be notified by the government in the coming months.
FAQs: VB GRAMG Act 2025
- What is the VB GRAMG Act 2025?
The Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 is a new rural employment law that replaces MGNREGA and increases guaranteed workdays. - How many days of work does the new Act guarantee?
The Act raises the statutory employment guarantee from 100 to 125 days per rural household per year. - How is funding different under the new law?
The scheme shifts to a 60:40 Centre–state cost-sharing model, with special ratios for northeastern states and Union Territories. - Why are Opposition parties criticising the Act?
Opposition leaders argue it weakens MGNREGA’s demand-driven, rights-based framework and object to the removal of Mahatma Gandhi’s name. - When will the new scheme be implemented?
The Act has received presidential assent and been notified. States will roll it out after operational rules are issued.
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