Rural employment has been a central pillar of India’s social protection framework for nearly two decades, the Economic Survey 2025-26 has noted. While acknowledging the substantial contribution of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Survey observes that the programme has reached the limits of its existing architecture and now warrants reassessment in light of evolving rural economic realities.
Since its enactment in 2005, MGNREGS has provided wage employment, stabilised rural incomes, and supported the creation of basic infrastructure by guaranteeing at least 100 days of unskilled work to rural households. However, rising incomes, improved rural connectivity, expanding digital adoption, and increasingly diversified livelihoods have significantly altered the nature of rural employment demand, necessitating a strategic redesign of the scheme.
Gains Achieved Through Reforms
The Survey highlights that sustained administrative and technological reforms over the years strengthened MGNREGS implementation, improving participation, transparency, and governance. Key outcomes include:
- Women’s participation increasing from 48 per cent in FY 2013-14 to 58.1 per cent in FY 2024-25
- Sharp expansion in Aadhaar seeding and adoption of the Aadhaar-Based Payment System
- Near-universal electronic wage payments
- Enhanced monitoring through large-scale geo-tagging of assets
- A rising share of individual household assets
Field-level functionaries played a critical role in sustaining implementation, often operating under constrained administrative and financial resources.
Structural Limitations and Implementation Gaps
Despite these improvements, the Survey points to persistent structural weaknesses. Monitoring across several states revealed:
- Instances of work not executed on the ground
- Discrepancies between expenditure and physical progress
- Use of machinery in labour-intensive works
- Bypassing of digital attendance systems
Misappropriation accumulated over time, and only a small proportion of households completed the full 100 days of employment in the post-pandemic period. These issues suggest that while delivery mechanisms improved, the overall design of MGNREGS reached its functional limits, reinforcing the case for comprehensive reform.
VBGRAMG Act, 2025: A Comprehensive Statutory Overhaul
In response, the government enacted the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, referred to as the VBGRAMG Act, 2025.
The Act represents a fundamental restructuring of rural employment policy, aligning wage employment with the long-term vision of Viksit Bharat 2047. It builds on the strengths of MGNREGS while addressing its shortcomings through a framework that emphasises accountability, infrastructure outcomes, and income security.
Key Features of the VBGRAMG Act, 2025
Timely Wages and Social Protection
The Act mandates that wages be paid weekly, or at the latest within a fortnight of work completion, strengthening worker protection and reducing participation-disincentivising delays.
Administrative Strengthening
To professionalise implementation, the Act:
- Raises the administrative expenditure ceiling from 6 per cent to 9 per cent
- Enables better staffing, training, remuneration, and technical capacity at the field level
This shift is expected to improve planning, execution, and accountability.
Decentralised Planning and Local Empowerment
Planning is anchored in Viksit Gram Panchayat Plans, spatially integrated with platforms such as PM Gati Shakti. Gram Panchayats continue to execute at least 50 per cent of works by cost, ensuring participatory, context-specific development and effective convergence across schemes.
Asset Creation and National Integration
All assets created are aggregated into the Viksit Bharat National Rural Infrastructure Stack, aligning local works with national development priorities while supporting both immediate livelihoods and long-term infrastructure creation.
Transparency, Monitoring and Accountability
The Act strengthens oversight through:
- Central powers to investigate complaints, suspend funds, and direct corrective action
- Real-time digital monitoring, GPS-enabled tracking, and MIS dashboards
- Weekly public disclosures
- Mandatory social audits every six months
- Use of biometric authentication and AI-enabled monitoring to detect irregularities early
Fiscal Sustainability
A disciplined financial architecture ensures predictable funding through:
- Normative allocations
- Clear cost-sharing mechanisms
- Additional disaster-related support
Enhanced oversight reduces misappropriation risks while containing fiscal pressure on states.
Conclusion
The Economic Survey 2025-26 concludes that while MGNREGS delivered substantial gains in participation, transparency, and income security, structural constraints and changing rural realities necessitated reform. The VBGRAMG Act, 2025 marks a decisive transition from a relief-oriented framework to a modern, accountable, and infrastructure-linked rural employment system, aligned with the long-term vision of Viksit Bharat 2047. (Source: PIB PR ID 2219946)
Economic Survey of India 2025-26 dated 29/01/2026