VB-G RAM G: India’s Rs 1.51 Lakh Crore Rural Scheme That Replaces MGNREGA From July 1, 2026

India has replaced its flagship rural employment programme. The Mahatma Gandhi National Rural Employment Guarantee Act, which gave rural households the legal right to 100 days of work for 21 years, ends on June 30, 2026. From July 1, VB-G RAM G takes over.

Think of the change this way. MGNREGA was a social safety net. It gave work to rural households during distress. VB-G RAM G treats that same work as a building block for rural infrastructure. Every person-day of labour must now produce an asset within one of four defined verticals: water security, core rural infrastructure, livelihood infrastructure, or climate resilience. The work guarantee stays. The purpose of the work is upgraded.

What MGNREGA Achieved in 21 Years

The Mahatma Gandhi National Rural Employment Guarantee Act came into force in 2005. It was landmark legislation. For the first time, the law created a statutory right to work. Any rural household willing to provide unskilled manual labour was legally entitled to 100 days of employment per year. The government was obligated to provide work within 15 days or pay an unemployment allowance.

Over 21 years, the outcomes were meaningful. Women’s participation rose from 48 percent in FY 2013-14 to 58.15 percent in FY 2025-26. Aadhaar-Based Payment Systems spread widely, making wage payments electronic and reducing leakages. Geo-tagged asset creation expanded significantly. The scheme became a critical income support mechanism during the COVID-19 pandemic when rural employment demand surged.

The NDA government spent Rs 8,58,346 crore on MGNREGA between 2014 and 2026. The UPA government spent Rs 2,12,409 crore between 2006-07 and 2014. The scale grew substantially over time.

What MGNREGA Could Not Fix

The Ministry of Rural Development’s own assessment, documented in the PIB explainer of December 22, 2025, identified persistent structural problems that incremental reform could not resolve. Monitoring across states revealed work not found on the ground despite expenditure being logged. Machines were used in works mandated to be labour-intensive. Digital attendance systems were frequently bypassed. Misappropriation accumulated. Only a small proportion of households completed the full 100 days even in post-pandemic periods.

More fundamentally, rural India of 2025 is different from rural India of 2005. Extreme poverty declined from 27.1 percent in 2011-12 to 5.3 percent in 2022-23. Rural livelihoods diversified. Digital penetration deepened. The purely demand-driven, unskilled-labour design of MGNREGA no longer matched contemporary rural realities.

The Employment Guarantee: 125 Days and the Agricultural Window

The expansion from 100 to 125 days is the most visible improvement. But the design around it is nuanced. The Act builds in an aggregated 60-day no-work period during peak agricultural seasons. Workers receive 125 guaranteed workdays within the remaining 305 days of the year.

This addresses a persistent tension under MGNREGA: the scheme occasionally competed with farm labour during sowing and harvesting, driving up farm wages in ways that hurt small and marginal farmers. The VB-G RAM G structure protects both the worker’s right to guaranteed employment and the farmer’s access to affordable seasonal labour.

The Funding Shift: From Central Sector to Centrally Sponsored

MGNREGA was 100 percent Centrally funded. States had no financial obligation. VB-G RAM G introduces a 60:40 Centre-State cost-sharing ratio for general states and 90:10 for North-Eastern states and Union Territories. This makes it a Centrally Sponsored Scheme, placing it in the same category as PM Awas Yojana and Jal Jeevan Mission.

Normative vs Demand-Based Allocation

Under MGNREGA, allocations were demand-driven: states received funds based on how much work was demanded and generated. This led to unpredictable budgeting and, in some cases, incentivised inflated demand projections.

VB-G RAM G introduces normative allocations: the Central Government calculates each state’s annual entitlement based on objective parameters linked to the 16th Finance Commission devolution formula. A portion of funds is also allocated based on pre-fixed performance criteria, rewarding states that implement better with higher allocations. This links funding to outcomes rather than reported demand.

The Four Priority Verticals

Every work taken up under VB-G RAM G must fall within one of four defined infrastructure verticals. This is a fundamental departure from MGNREGA’s general permissible works list.

The Viksit Bharat National Rural Infrastructure Stack

Every asset created under VB-G RAM G is aggregated into a national database called the Viksit Bharat National Rural Infrastructure Stack. This is a unified digital repository of all rural assets created under the programme, geo-tagged and accessible centrally. It ensures assets are not double-counted, quality can be verified against photographic and GPS records, and future infrastructure planning can build on what already exists rather than starting from scratch each year. The Stack is integrated with the PM Gati Shakti National Master Plan’s GIS layers.

Wage Payment: A Legal Obligation, Not a Guideline

Under VB-G RAM G, wages must be disbursed on a weekly basis or within a fortnight of work completion. If this timeline is not met, the Act mandates legal action. Minister Chouhan stated at Erode on January 5, 2026: “If the amount is not paid to the beneficiaries within 15 days of their employment, legal action would be taken under the rule of law.” This is a significant step beyond MGNREGA’s compensation provisions, which existed on paper but were inconsistently applied in practice. Source: Newsonair.gov.in, January 5, 2026.

Women: From Participation to Priority

The Act mandates at least one-third of all beneficiaries to be women. Building on MGNREGA’s achievement where women’s participation reached 58.15 percent in FY 2025-26, VB-G RAM G institutionalises this with a new instrument: Gramin Rozgar Guarantee Cards specifically for single women. These cards provide single women with priority in work allocation, formally recognising their heightened economic vulnerability.

Understanding the Rs 1.51 Lakh Crore Figure

The total estimated annual requirement of funds under VB-G RAM G, covering wages, materials, and administrative components, is Rs 1,51,282 crore including both Central and State shares. The Central Government’s share for FY 2026-27 is Rs 95,692.31 crore. The Ministry of Rural Development describes this as the highest-ever budgeted rural employment commitment in India’s history.

State-Wise Allocation Illustration

Sources: PIB Press Note (June 9, 2026); Kerala Kaumudi English (confirming Kerala allocation); Newsonair.gov.in (March 17, 2026, Rajya Sabha statement).

VB-G RAM G’s digital monitoring architecture is the most significant technological upgrade from MGNREGA. The PIB explainer describes a layered system designed to close the gaps that allowed MGNREGA leakages to persist despite earlier digitisation efforts.