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Budget 2026-27: Job Scheme Funding Shifts Spark Expert Doubts
The analysis of the Union Budget 2026-27 reveals a significant reorientation in the government's strategy for direct job creation. This shift is marked by a substantial reduction in allocations for the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY), an employment-linked incentive scheme, and a fundamental change in the funding model for the newly introduced Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Grameen) (VB-G RAM G). These budgetary adjustments have immediately drawn criticism from labour experts and activists, who question the government's commitment to directly fostering employment opportunities.
Funding Realignment Sparks Job Worries
The Union Budget for 2026-27 has introduced substantial changes to key employment generation programs, prompting concerns among labour experts and civil society organizations. The Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY), launched to incentivize formal sector employment, saw its allocation for the 2025-26 fiscal year plummet from an initial ₹20,000 crore in budgetary estimates (BE) to just ₹848 crore in revised estimates (RE) [cite: News1]. For the upcoming fiscal year 2026-27, PMVBRY is allocated ₹20,083 crore, a figure that labor economists argue may not fully compensate for the drastic cuts seen in the previous year's revised estimates. This employment-linked incentive scheme aims to support first-time formal sector employees with a wage incentive of up to ₹15,000 and employers with up to ₹3,000 per month per new hire, targeting an estimated 1.92 crore individuals. The sharp reduction in revised estimates for the prior fiscal year signals a potential de-prioritization of this direct job creation mechanism.
VB-G RAM G: A New Framework with Shifting Responsibilities
Replacing the long-standing Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the new Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Grameen) (VB-G RAM G) has been allocated ₹95,692 crore for 2026-27. This new scheme aims to guarantee 125 days of employment per household annually, an increase from MGNREGA's 100 days. However, a significant departure lies in its funding structure. Under VB-G RAM G, the central government will fund 60% of the total cost, requiring states to bear the remaining 40%, a stark contrast to MGNREGA where the Centre largely covered wage and material costs. This cost-sharing shift is expected to place an additional financial burden on states, potentially running into thousands of crores annually, prompting concerns that it could lead to tighter controls on work generation and limit the scheme's reach. The government's revised estimate for MGNREGA in 2025-26 stood at ₹88,000 crore, with an allocation of ₹30,000 crore set aside for it in 2026-27, indicating a phased transition.
Doubts Over Employment Guarantee and Transparency
Critics argue that the total allocation for rural employment schemes, ₹1.25 lakh crore combined for VB-G RAM G and the residual MGNREGA, falls significantly short of what is needed to fulfill the promise of 125 guaranteed workdays for all eligible households. Calculations suggest that ₹2.30 lakh crore might be required to meet this commitment, leading to concerns that the actual provision of workdays could be curtailed. The NREGA Sangharsh Morcha, a civil society collective, has voiced its apprehension over the lack of clarity regarding the notification of VB-G RAM G and its state-wise allocations, creating uncertainty for state governments and rural workers. Experts like Prof. Shyam Sundar note that direct job creation, while important, appears less of a government strategy compared to indirect job creation through infrastructure or sector-specific initiatives like the semiconductor expansion [cite: News1]. The shift from MGNREGA's demand-driven, rights-based entitlement to VB-G RAM G's normative budgeting and centrally sponsored structure, with state financial liability, reconfigures the state-worker relationship and risks greater exclusion. This move away from an entitlement framework to a more discretionary, capped system raises fundamental questions about the future of guaranteed employment in rural India.