On Rural Jobs, The 60:40 Dilemma, Pg11

Key Highlights:

• The National Rural Employment Guarantee Scheme (NREGS), previously known as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), has been renamed Viksit Bharat - Gramin Rozgar and Ajeevika Mission (Gramin) (VB-GRAM-G).
• The funding pattern for the scheme has been altered from 100% central funding to a 60:40 Centre-state contribution ratio for most states.
• Himalayan and Northeastern states will follow a 90:10 Centre-state split, while Union Territories without legislatures will continue to receive 100% central funding.
• The new VB-GRAM-G Act, 2025, which came into effect on July 1, 2026, increases the guaranteed wage employment from 100 days to 125 days per rural household annually.
• States, including those governed by opposition parties, have expressed fiscal concerns over the new funding model but are allocating their required share due to the scheme's critical importance for rural livelihoods.

Detailed Insights:

• The original National Rural Employment Guarantee Act (NREGA) was enacted in 2005 and implemented in February 2006, later being renamed MGNREGA in 2009.
• The transition to the VB-GRAM-G Act, 2025, which replaced the 21-year-old MGNREGA, aims to align rural employment policy with the national vision of Viksit Bharat @2047.
• States have opposed the new funding pattern on political, social, economic, and fiscal grounds, viewing it as an increased financial burden.
• Socially, the scheme provides essential livelihood and minimum income security to poor farmers and laborers, acting as a crucial safety net.
• Economically, the wages provided under the scheme act as a floor for rural wages, preventing their collapse and empowering job card holders.
• Despite initial protests, states like Tamil Nadu, Karnataka, Telangana, and Jharkhand have budgeted their 40% share for the VB-GRAM-G scheme for the current financial year.
• The scheme's continued implementation underscores its transformative impact on the rural economy by ensuring employment and wage security.

Key Concepts Involved:

• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): A social welfare measure enacted in 2005, guaranteeing 100 days of wage employment to rural households.
• Viksit Bharat - Gramin Rozgar and Ajeevika Mission (Gramin) (VB-GRAM-G): The new legislation, effective July 1, 2026, replacing MGNREGA, guaranteeing 125 days of rural wage employment.
• Fiscal Federalism: The system of financial relations between central and sub-national governments, including the division of revenue-raising powers and expenditure responsibilities.