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Major Overhaul of Rural Employment Scheme
The Indian government has introduced draft rules for a new rural employment law, the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act. This act will replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) starting July 1, 2026. Citizens can provide feedback on the proposed rules until June 20, 2026.
A significant change is the move away from MGNREGA's demand-driven approach to a system with fixed resource allocations. The Central Government will decide the annual funds for each state based on specific criteria. Some critics have noted this resembles schemes from before MGNREGA was introduced.
Funding Tied to Performance
Allocations will consider recommendations from the 16th Finance Commission, if accepted by the government. The Central government will have the final say on how these funds are distributed among states. From the 2027-28 financial year, part of the funding may depend on states meeting performance goals. These goals could include timely wage payments, completing audits, and finishing projects. The Centre can also add more performance measures.
New Regulatory Structures
Draft rules are also being prepared for other aspects of the scheme. This includes managing the transition from the old act, setting up a National Level Steering Committee and a Central Gramin Rozgar Guarantee Council, rules for administrative costs, handling complaints, processing wage payments, and managing unemployment allowances.
Economic Impacts Under Scrutiny
The shift to a fixed-resource model could significantly affect state economies and rural job security. MGNREGA allowed states to request funds based on the need for work, acting as a flexible safety net. The new system might limit total available funds, regardless of how many people need work, potentially reducing guaranteed workdays. The dependence on Finance Commission advice and performance metrics adds new conditions. This change aligns with the government's aim for better fiscal management and performance in welfare programs. However, concerns exist that this could make the employment guarantee scheme less adaptable, especially during economic downturns or high unemployment periods. The final impact will depend on the specific rules set and how the Central government oversees the program.