A 70% Drop in Rural Employment: Is VB-GRAM G Failing Its First Test?

The Viksit Bharat-Guarantee for Rozgar & Ajeevika Mission (Gramin) Act, 2025 introduced the VB-GRAM G scheme for employment guarantee that came into effect from 1 July 2026, replacing the Mahatma Gandhi National Rural Employment Act (MGNREGA) scheme.The VB-GRAM G scheme completed full one month of operation in July. This scheme offers 125 days of guaranteed employment against 100 days of employment by the MGNREGA. The new scheme introduced two months of compulsory scheme job holiday (state governments cannot offer work during such periods). Only a few states notified July for no such VB-GRAM G job.There are conflicting claims about the employment generated in July. The July performance has also raised questions about the adequacy of employment guarantee under the VB-GRAM G.What are the key differentiating features between VB-GRAM G and MGNREGA? How was the July 2026 performance? Is VB-GRAM G a better scheme? Will it end up only saving money for the Central government? VB-GRAM G: India's Rural Employment Guarantee Needs More Than Tech PromisesThere are four major distinguishing features between VB-GRAM G and MGNREGA.First, the employment guarantee for a household (any member or members of a registered household can work) has been raised from 100 days to 125 days in a year. Second, the Central government has converted MGNREGA job guarantee of 100 percent payment for the wage expenditure on MGNREGA works into a Centrally sponsored scheme which limits the Central government liability to 60 percent of wages expenditure. Central expenditure commitment of 85 percent of the material cost has also been reduced to 60 percent. Third, the Central government has got exclusive authority to determine state-wise normative allocation. Any expenditure in excess of normative allocation (even if it does not cover 60 percent of wages cost) will have to be borne by the state concerned. Fourth, the VB-GRAM G Act mandates the state governments to compulsorily notify in advance a period aggregating to 60 days in a financial year, covering the peak agricultural 3seasons of sowing and harvesting, during which works under the VB-GRAM G scheme "shall not be undertaken".These four changes have materially altered the nature and credibility of the employment guarantee.G RAM G Bill Diminishes Job Guarantee: Centralisation Tramples FederalismAll 36 states and union territories (UTs) have notified respective VB-GRAM G schemes. Accordingly, implementation of the VB-GRAM G scheme commenced all over the country on 1 July 2026. Rs 300 per day has been notified as the national minimum wage under VB-GRAM G scheme. The Central government has not provided information about how many states notified July as ‘no VB-GRAM G work’ for the month or days. Media reports suggest about five states did so. The Central government press release on 28 July claimed: "from July 1st 2026, over 99.5 percent workers who demanded employment have been offered employment and 5.2 crore person-days have been generated across 8.46 worksites as on 22.07.2026." Another press release issued on 31 July provided state-wise approved allocations under VB-GRAM G totalling Rs 95,692.31 crore for 2026-27 (Rs 25,844.97 crore released as first instalment). It did not provide any update on person-days created. The government has not released a final report of person-days created in July 2026. The website's dashboard strangely skips person-days created for July and reports person-days created so far in August. Clearly, the government has not mustered courage to disclose July employment created numbers. As on 20 August, a total of 11.29 crore person-days are reported to have been generated since 1 July 2026, which means 6.09 crore (11.29 crore minus 5.20 crore) person-days were generated in 28 days since 22 July 2026 (at average of 21.75 lakh per day). In such a case, the VB-GRAM G created 1.96 crore person-days between 23 July and 31 July, taking total person-days created in July 2026 to 7.16 crore. MGNREGA dashboard reports that total 87.56 crore person-days were generated until end of June 2025 and 112.79 crore until end of July 2025, meaning as many as 25.23 crore person-days generated in July 2025. There is a clear evidence that there was massive reduction of over 70 percent in employment generated under VB-GRAM G in July 2026 (7.16 crore against 25.23 crore in July 2026). July 2025 was not a fluke performance; in July 2024 as well, the person-days generated were 26.36 crore. Is Govt Hiding the Truth Behind Unemployment Data? If Not, Where Are the Jobs?The MGNREGA was designed to provide a statutory guarantee to every rural Indian of work on MGNREGA works in case anyone did not get employment on normal agricultural and non-agricultural works (e.g. construction, mining etc.) for any reason whatsoever or they felt that wages offered to them was way below statutory minimum wage. The Central government stood as the guarantor. Budgetary resources were no constraint. The guarantee was credible and statutorily enforceable. That MGNREGA guarantee worked. The fact that hardly any worker or workers’ organisations ever approached any court for enforcing the guarantee proves that the guarantee really delivered employment. Further fact that the state governments incurred a minuscule liability of unemployment allowance (which they had to pay in case they did not provide work sought by demanding labour) also proves effectiveness of employment guarantee. The VB-GRAM G has virtually blown away this water-tight and credible guarantee. The VB-GRAM G Act, by enacting provisions like no work during two months of peak agricultural operations, actually has hit at the root of the fundamentals of the guarantee. In India, rural labour needs employment during agriculture seasons as well at fair (minimum wage). If such works are available, no agriculture labour would ask for employment under MGNREGA/VB-GRAM G. The fact that over 20 crore person-days were created in the month of July year after year (despite it being the peak agriculture season in most parts of the country) proves that rural labour does not get adequate employment in peak agriculture seasons as well. The VB-GRAM G Act, in fact, ends up taking the side of bigger farmers by diverting agriculture labour at cheaper rates during agriculture seasons by denying them the option of seeking work under VB-GRAM G scheme. The Central government kept a budget of Rs 95,594.31 crore for VB-GRAM G and Rs 30,000 crore for MGNREGA, in total Rs 125,594.31 crore for the year 2026-27. This is far in excess of actual expenditure of Rs 85,834.40 crore in 2024-25 and Rs 88,000 crore in 2025-26 (RE). Why did the Central government enhance the employment guarantee outlay so massively? It was certainly done to create an optical illusion to impress the people that the government, by raising guaranteed employment from 100 days to 125 days, will incur much higher expenditure on VB-GRAM G.Low Funds, Pending Dues, No Work: How Govt Crippled MGNREGA Before Renaming ItThe minimum 100 days of work guaranteed for a household has never been used by the households who worked on MGNREGA works. Average days of employment provided, in previous six years including Covid-19 year of 2021-22, averaged between 47.36 days and 51.65 days. No. of households which completed 100 days of employment has been steadily declining (from 71.78 lakh in 2020-21 to 22.93 lakh in 2025-27). There is no big demand for increasing number of days from 100 to 125. The average days of employment per household or the number of households which worked full 100/125 days under will not change simply because the guaranteed employment days have been increased from 100 to 125 under VB-GRAM G. In addition to lower number of person-days, the Central government would be saving money also because it will be bearing only 60 percent of wages and materials expenditure. As the actual expenditures under MGNREGA was about Rs 87,000 crore in the previous two years, the gross expenditure under VB-GRAM G is unlikely to exceed Rs 75,000-80,000 crore in 2026-27. The Central government share would be much lower (around Rs 55,000-60,000 crore considering April-June guarantee was under MGNREGA). The government can look forward to savings of over 60,000-70,000 crore on combined MGNREGA and VB-GRAM G provision. But of course, that the cost of poor labour of rural India. (Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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VB-GRAM G Has Killed India's Watertight Job Guarantee Scheme. Data Proves it

There has been a massive reduction of over 70 percent in employment generated under VB-GRAM G in July 2026.

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Topics: MNREGA Ministry of Labour and Employment Unemployment Data