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New Rural Job Law Takes Effect With 125-Day Guarantee as States Face Fiscal Strain

The overhaul shifts costs to states through 60:40 sharing with capped allocations.

Overview

  • Parliament’s VB‑G RAM G law, which replaces MGNREGA, is now in force after presidential assent and raises the statutory work guarantee to 125 days per rural household.
  • Financing moves to a 60:40 Centre–state split for most states, with 90:10 for designated hill and northeastern regions, and any spending beyond Centre-set normative allocations must be borne by states.
  • An Indian Express analysis estimates states would have spent about Rs 41,494 crore on wages and materials in FY25 under the new model, up from roughly Rs 10,120 crore under MGNREGA rules.
  • The Act permits states to pre‑notify up to 60 days when no works are undertaken during peak sowing and harvesting, even as past delivery under MGNREGA averaged only about 48 workdays per household over five years.
  • Opposition leaders and some state governments are preparing court challenges, while Telangana has scheduled field surveys from December 26–31 to map works for the 2026–27 rollout.