Playing hide and seek on employment guarantee
The oddly named Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act (VB – G RAM G Act) has attracted a torrent of criticisms in recent weeks. A few commentators have defended it. Most of them are associated with the Central government. Still, their arguments are worth considering.
Union Minister for Rural Development Shivraj Singh Chouhan took the lead with two articles in national dailies. He did a great service to the public by presenting the case for the VB – G RAM G Act on behalf of the Central government. Alas, the case is not impressive. Mr. Chouhan claimed that the VB – G RAM G Act provides the same work guarantee as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, with an enhanced entitlement of 125 days per household per year instead of 100 days. However, as others have already pointed out, this claim overlooks the “switch-off” provision embedded in Section 5(1) of the Act, which states that the employment guarantee applies “in such rural area in the State as may be notified by the Central government”. This discretion defeats the purpose of an employment guarantee. It is like providing a work guarantee without a guarantee that the guarantee applies.
Conditional on the guarantee being in place, the VB-G RAM G Act does extend it for 125 days. But this could have been done under MGNREGA, without even requiring an amendment of the Act. It is no justification whatsoever for the VB-G RAM G Act. Indeed, a few States are already guaranteeing 125 days under MGNREGA.
The disentitlement saga
Amplifying the claim that the VB-G RAM G Act is an expansion rather than a restriction of MGNREGA, Mr. Chouhan played up the removal, in the VB-G RAM G Act, of earlier “disentitlement provisions”. In the absence of any explanation, most readers must have wondered what this is about. Since the same point was made by other champions of VB-G RAM G, it is worth clarifying.
When MGNREGA was drafted, a mild concern arose about the possibility of frivolous work applications — that is, applications from people who have no intention to work. Some of them, for instance, might do this in the hope of getting the unemployment allowance instead of a work offer. By way of protection against frivolous applications, a provision was inserted to the effect that if someone turns down a work offer after applying, then they will lose eligibility to the unemployment allowance for a period of three months. This is a weak protection against frivolous work applications, but it does not do any harm. For some reason, this clause was called “Disentitlement to receive unemployment allowance in certain circumstances”.
As it turns out, frivolous work applications are an imaginary problem. This problem has never arisen in a serious way in the last 20 years. The disentitlement clause has never been used, and indeed it is quite useless (unlike the separate provision stating that no unemployment allowance is due to someone who turns down a work offer after applying). The fact that the VB-G RAM G Act omits this provision is neither here nor there. Mr. Chauhan’s claim that the VB-G RAM G Act removes “disentitlement provisions that had the effect of denying workers their due” is little more than hot air.
Normative funding
Turning to better arguments, one of VB-G RAM G’s main selling points is the “shift to normative funding as opposed to an archaic demand-driven approach”, as Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, puts it. Here, the pretence that VB-G RAM G preserves the principle of employment guarantee is quietly abandoned. Indeed, if there is an employment guarantee, then funding must be “demand-driven”. Instead, the assumption here is that most States will not spend beyond the “normative allocations” determined by the Centre. That, indeed, is a sensible assumption. The normative allocations are likely to become de facto budget caps, as the critics of VB-G RAM G have argued from the word go.
The advocates of “normative funding” make a virtue of these budget caps. They claim, in particular, that normative funding will help to ensure a more equitable distribution of expenditure across States. This concern arises from an alleged imbalance of MGNREGA expenditure in favour of better-off States. As a matter of fact, there is no statistical correlation, across States, between MGNREGA employment per rural household and baseline poverty rates or per capita expenditure. High levels of per household MNREGA employment can be found in poor States (for example, Chhattisgarh) as well as in relatively well-off States (for example, Tamil Nadu), just as low levels of employment can be found in poor as well as better-off States (for example, Bihar and Gujarat, respectively).
Of course, one might still wish for a strong positive correlation across States between baseline poverty and MGNREGA employment. It would certainly be useful if poor States such as Bihar and Jharkhand accounted for a larger share of MGNREGA employment and expenditure. But the imposition of budget caps and cost-sharing is hardly going to help them. A much better approach would be to raise MGNREGA wage rates in the poorer States. That is long overdue.
Employment guarantee is a bold idea that holds much promise not only for India but for the world. There is nothing surprising in the fact that some of India’s better-governed States are making more effective use of it than the rest. Many social programmes in India, from school meals to maternity benefits, began in south India and were extended to the whole country in due course. If MGNREGA is also doing better in south India for the time being, there is no reason to press the panic button and slap budget caps. After all, the MGNREGA budget is not very large — barely 0.25% of India’s GDP as things stand.
Stray arguments
Another common pitch for VB-G RAM G is that this new Act will eliminate corruption. How so? The provisions for transparency, social audits and so on are much the same as in MGNREGA. The main innovation is relentless insistence, within the Act, on the use of advanced digital technology. But digital technologies are already being used with abandon in MGNREGA. Further, these technologies have a mixed record, to put it mildly. Some have undermined workers’ rights and sapped their interest in MGNREGA, often fuelling corruption in the process. When workers are fed up with technical glitches (like their wages being diverted to Airtel wallets, as happened in 2017), it is tempting for them to stop working by the rules and to cooperate instead with a corrupt middleman who uses their job cards and bank accounts to siphon off MGNREGA funds in exchange for a share of the loot. Instead of learning from these failures, the VB-G RAM G Act perpetuates blind faith in digital technology.
I have tried to be generous to the advocates of the VB-G RAM G Act by focusing on their serious arguments. Some of them, however, also indulge in platitudes and fallacies. For instance, they try to credit the VB-G RAM G Act for provisions that are actually copy-pasted or paraphrased from MGNREGA. To illustrate, consider this statement of Tuhin Sinha, national spokesperson for the Bharatiya Janata Party: “Delayed wages were among the most corrosive failures of MGNREGA, undermining trust in the system. VB-G RAM G addresses this head-on by mandating weekly wage payments, with an outer limit of a fortnight.” Surely, he knows that this “head-on” provision is copied from MGNREGA? Similarly, when Mr. Chouhan claims that Section 20 of the VB-G RAM G Act “strengthens social audits”, he must know that it is more or less identical to Section 17 of MGNREGA.
In short, there is little substance in recent arguments for the replacement of MGNREGA with the VB-G RAM G Act. The main purpose of the new Act seems to be to enable the Modi government to run the show and steal the credit, as happened when the National Food Security Act was repackaged as a bunch of Prime Minister’s schemes. Employment guarantee and workers’ rights are on the back seat.
Published – January 27, 2026 01:15 am IST
