Economic Survey Flags Limits of MGNREGS, Highlights New VB–G RAM G Act as Major Rural Employment Overhaul

New Delhi, January 29: The Economic Survey 2025–26, tabled in Parliament by Union Finance Minister Nirmala Sitharaman, has stated that the rural employment scheme MGNREGS has reached its limits and requires reassessment in light of evolving rural realities, even as it acknowledged the scheme’s significant contributions over the past two decades.

According to the Survey, rural employment has remained a cornerstone of India’s social protection framework since the enactment of MGNREGS in 2005, providing wage employment, stabilising rural incomes and creating basic infrastructure. However, rising incomes, improved connectivity, digital adoption and diversified livelihoods have transformed rural employment needs, necessitating a redesign of the programme.

The Survey noted that several administrative and technological reforms strengthened MGNREGS over time, leading to improved transparency and participation. Women’s participation rose steadily from 48 per cent in FY14 to 58.1 per cent in FY25, Aadhaar seeding expanded, electronic wage payments became nearly universal and geo-tagging of assets improved monitoring. Despite these gains, structural weaknesses persisted, including irregularities in execution, misuse of machinery, bypassing of digital attendance systems and limited completion of the guaranteed 100 days of work by households after the pandemic.

Against this backdrop, the government has enacted the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, also known as the VB–G RAM G Act. The Survey described the new law as a comprehensive statutory overhaul of MGNREGS, aligning rural employment with the long-term vision of Viksit Bharat 2047, while strengthening accountability, infrastructure outcomes and income security.

Key features of the VB–G RAM G Act include timely wage payments on a weekly or fortnightly basis, enhanced administrative capacity with an increase in administrative expenditure from 6 per cent to 9 per cent, decentralised planning through Viksit Gram Panchayat Plans, and stronger integration of rural works with national development priorities. The Act also introduces stricter transparency and monitoring measures, including real-time digital tracking, regular social audits and greater powers for the Centre to address irregularities.

The Survey said the new framework seeks to build on the achievements of MGNREGS while addressing its shortcomings through a modern, accountable and infrastructure-focused rural employment system aimed at sustainable and inclusive growth.

(Source: PIB)