Economic Survey: Why India is replacing MGNREGS with new VB G-RAM G Act

With politics raging over the replacement of MGNREGS, India’s flagship rural employment scheme, the economic survey argued that the UPA-era scheme had reached the limits of its existing design and hence required reassessment in light of changing rural realities.

The survey, tabled in Parliament by Union Finance and Corporate Affairs Minister Nirmala Sitharaman, argues that while the scheme delivered major gains over two decades, structural weaknesses now constrain its effectiveness.

Since its launch in 2005, the MGNREGS has been a cornerstone of   India’s social protection framework. It provided wage employment, stabilised rural incomes and helped create basic infrastructure by guaranteeing up to 100 days of unskilled work to rural households. However, the Survey notes that rising incomes, better connectivity, digital adoption and diversified livelihoods have altered rural employment needs.

Over time, administrative and technological reforms improved implementation. Women’s participation rose steadily from 48 per cent in FY14 to 58.1 per cent in FY25. Aadhaar seeding expanded sharply, the Aadhaar-Based Payment System was widely adopted, and electronic wage payments became nearly universal. Monitoring improved through geo-tagging of assets and a higher share of individual household assets. Field-level staff played a key role in sustaining delivery despite limited resources.

At the same time, the Survey flags persistent structural problems. Monitoring in several states revealed gaps such as work not being executed on the ground, mismatches between expenditure and physical progress, use of machines in labour-intensive works, and frequent bypassing of digital attendance systems. Misappropriation accumulated over time, and only a small share of households completed the full 100 days of work in the post-pandemic period. These trends suggest that while delivery systems improved, the overall architecture of MGNREGS has “reached its limits”.

Against this backdrop, the government has enacted the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, or VB G-RAM G Act, which the Survey describes as a comprehensive statutory overhaul of MGNREGS aligned with the vision of Viksit Bharat 2047.

The new law introduces weekly wage payments, or payment within a fortnight at the latest, to reduce delays that previously discouraged participation. It strengthens administration by raising the administrative  expenditure ceiling from six per cent to nine per cent, allowing better staffing, training and technical capacity at the field level, the survey added.

The government says planning under the new framework is decentralised through Viksit Gram Panchayat Plans, integrated with national platforms such as PM Gati Shakti. Gram Panchayats will continue to execute at least half the work by value, with stronger convergence across schemes. All assets created will be pooled into a Viksit Bharat National Rural Infrastructure Stack, linking local works to long-term national infrastructure goals.

Addressing other concerns, the survey adds that transparency and accountability have also been tightened. The Centre can investigate complaints, suspend fund releases in cases of serious irregularities and order corrective action. Digital monitoring, GPS tracking, public dashboards and mandatory social audits every six months are built into the system, supported by biometric and AI-enabled tools.

But the Budget session is likely to feature protests from the Opposition, particularly the Congress.