Rural employment guarantee struggles: Workdays drop over 40% amid scheme transition

Rural employment generation under India's guarantee scheme has seen a sharp decline in the first four months of the current financial year, raising questions about the transition from the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to the new Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-G RAM G Act.

According to data from the Ministry of Rural Development, the combined employment generated by MGNREGA and VB-G RAM G in April-July 2026 stood at 70 crore person-days. In the corresponding period of 2024-25 and 2025-26, employment generation had been 128 crore and 119 crore person-days, respectively. This marks a decline of approximately 43% from the average of the two preceding years.

The ministry initially estimated July 2026 employment at 7.7 crore person-days, which suggested a 50% fall compared with July 2025. The latest figure is 8.3 crore, and the ministry expects the final number to be around 9 crore. Even with that anticipated total, the decline from July 2025 would exceed 40%.

The government has attributed part of the decline to some states suspending the scheme in parts of July under Section 6 of the Act. However, analysts point out that these states account for a small share of total employment, and the decline remains proportionally similar even when they are excluded. They also note that the drop began well before July.

The transition from MGNREGA to VB-G RAM G was scheduled to take effect on April 1, 2026, after Parliament passed the enabling Bill in December 2025. However, the switch did not happen on that date, as the rules had not been finalised. The ministry released draft rules for public consultation on May 22, 2026, and the final rules were issued only at the end of June. The wage rate for VB-G RAM G was notified on June 30, with a minimum of ₹300 per day, comparable to the earlier MGNREGA norm of ₹100 per day at 2009-10 prices. The new scheme officially replaced MGNREGA on July 1, 2026.

In the intervening months, confusion prevailed on the ground. Reports from several districts indicate that officials refused to open new works under the old scheme, and in many areas no work was available. This was particularly significant because April-July is normally a peak period for MGNREGA, given the slack agricultural season.

The decline has been widespread but uneven. In 10 of 19 major states, the reduction in employment during April-July 2026 ranged between 60% and 85%. States including Madhya Pradesh, Uttar Pradesh, and Jharkhand witnessed a virtual standstill in employment generation. In contrast, a few states such as Andhra Pradesh, Assam, and Telangana recorded relatively smaller declines.

The government had projected a substantial increase in employment under VB-G RAM G. The Union Budget for 2026-27 allocated ₹95,692 crore for the scheme, reflecting that expectation. The early results, however, point to a significant contraction. Officials say the scheme is still in its initial phase and employment generation is expected to stabilise as states adapt to the new rules. Critics argue that the transition was hasty and poorly implemented, leaving rural workers to bear the cost.

As the government and states work to operationalise VB-G RAM G, the immediate priority will be to restore employment flows and ensure that the scheme lives up to its stated purpose of providing a legal guarantee of work to rural households.