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India’s rural employment guarantee just got its most significant overhaul in two decades. From July 1, the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission Gramin, VB-G RAM G, replaced the Mahatma Gandhi National Rural Employment Guarantee Act of 2005. The ambition behind the change is real. So are the implementation questions it raises.
Start with what is genuinely better. Guaranteed employment rises from 100 days a year to 125. A national wage floor of Rs 300 per day has been notified for the first time, lifting 21 states that were paying below that mark. The average daily wage has moved from Rs 298.8 to Rs 327.4, a 10 per cent increase. Uttar Pradesh and Bihar, historically the lowest-paying, saw hikes of Rs 48 and Rs 45 respectively. For millions of workers in the Hindi heartland, this is the largest wage increase in years. That matters and deserves to be said clearly.
The wage question that needs resolving.
The Rs 300 floor is a starting point, not a destination. In 2019, an expert committee set up by the government and headed by Dr Anoop Satpathy recommended a national minimum wage of Rs 375 per day. The Parliamentary Standing Committee on Rural Development recommended at least Rs 400 as recently as March 2026. Inflation since 2019 has only widened that gap.
The government has a credible path here. The new Act does not freeze wages. It establishes a floor. Regular revision anchored to the recommendations and adjusted for inflation would give the reform the wage credibility it currently lacks. That is an administrative decision, not a legislative one. It can be done without returning to Parliament.
The funding structure needs state level cushioning.
Under MGNREGA, the Centre bore roughly 90 per cent of wage costs. The new Act shifts that to 60:40. Bihar, Madhya Pradesh and Jharkhand have formally raised concerns about absorbing the increased share. The numbers explain why. Bihar’s interim allocation covers roughly 100 days of work, not 125. Madhya Pradesh’s covers 43 days against a 125 day liability.
The 16th Finance Commission is the natural place to address this. A targeted devolution mechanism for high labour demand states or a graded transition to the new funding ratio, would protect the reform’s credibility in the states where rural employment demand is highest.
Clear the backlog first.
As of March 2026, Rs 17,144.13 crore was outstanding to 34 states from MGNREGA, including Rs 7,846.25 crore in unpaid wages to workers who have already completed work. Karnataka is owed Rs 700 crore. Jharkhand Rs 900 crore.
Clearing this backlog is the single most important signal the government can send about the seriousness of VB-G RAM G. Workers who have not been paid under the old law are the same workers the new law is asking to trust the system again. Their confidence will be built on what the Centre does about what it already owes, not on what it promises next.
The reform is worth getting right.
VB-G RAM G has the architecture of a genuine improvement. More days, a wage floor, modernised infrastructure and Gram Panchayat led planning. The question is not whether the intent is good. It clearly is. Wage revision, state fiscal support and clearing pending dues are not obstacles to the reform. They are the conditions under which it delivers. The government has built the foundation. What it does in the next six months will determine whether 125 days actually reaches the workers it is meant for.
Anant Srivastava is Founder and Lead Policy Analyst at the Development Policy Lab INDIA (DPLI), New Delhi. His peer-reviewed published work includes studies on digital governance and women’s inclusion in India’s sustainable development pathways and on judicial modernisation and economic growth in developing economies.
These pieces are being published as they have been received – they have not been edited/fact-checked by ThePrint.