[Evaluate the fiscal sustainability and federal cost-sharing implications of the ₹1.51 lakh-crore VB–G RAM G outlay for 2026–27.](/upsc-mains-answer/evaluate-fiscal-sustainability-federal-cost-sharing-4f54b3f)

Q. Evaluate the fiscal sustainability and federal cost-sharing implications of the ₹1.51 lakh-crore VB–G RAM G outlay for 2026–27. (15 marks, 250-350 words)

The Viksit Bharat–G RAM G Act, 2025, in force from 1 July 2026, repeals MGNREGA and raises the wage-employment guarantee to 125 days per rural household [4]. Its 2026–27 outlay — a Central share of ₹95,692.31 crore with a combined Centre–State programme size likely exceeding ₹1.51 lakh crore [3] — makes fiscal design as decisive as the legal guarantee itself.

Fiscal sustainability: strengths - Largest-ever Budget Estimate for a rural employment programme at BE stage, reducing the chronic mid-year supplementary-demand dependence of the earlier framework [3]. - Productive asset creation and data-driven planning convert wage spending into durable rural capital, improving the return on outlay [1]. - Digital attendance and digital wage payments curb leakages and ghost muster rolls, raising expenditure efficiency [3]. - The aggregated 60-day no-work period during peak sowing and harvesting caps demand in the costliest months while protecting farm-labour supply [3].

Fiscal sustainability: concerns - A statutory, demand-driven guarantee means outlays are floors, not ceilings; distress years can breach BE. - Twenty-five extra guaranteed days raise the structural wage bill, competing with capital expenditure.

Federal cost-sharing implications - The Centre–State shared-cost model is retained; roughly a third of the ₹1.51 lakh-crore outlay must come from State budgets [3], stressing fiscally weaker States. - States bearing material-component and administrative costs face liability without control over centrally fixed wage rates and entitlement days. - The Centre has sought to soften transition risk through an interim release to States and UTs and a pre-rollout preparedness review by the Department of Rural Development, with States notifying their own schemes [5][3].

On balance, the outlay is fiscally credible for 2026–27 — front-loaded, digitally ring-fenced and seasonally calibrated — but sustainability beyond the first year depends on demand realism and predictable State transfers. Timely reimbursement, transparent sharing norms and convergence with other rural missions would let the Act advance Article 41's promise of the right to work while keeping the fiscal path consistent with Viksit Bharat @2047 [1].

(~325 words)

Sources: 1. PIB Backgrounder — Viksit Bharat–G RAM G Act, 2025: Frequently Asked Questions (11 May 2026) — 125-day guarantee, productive asset creation, Viksit Bharat @2047 alignment 2. (not used) 3. VB-G RAM G Act 2025 Guarantees 125 Days of Rural Employment to Drive Viksit Bharat Vision, PIB — ₹95,692.31 crore Central share, >₹1.51 lakh crore total outlay, 60-day no-work period, digital wage rails, interim release and State scheme notifications 4. Historic Commencement of Viksit Bharat – G RAM G Act Across Rural India from July 1st 2026, PIB — commencement date, repeal of MGNREGA, enhancement from 100 to 125 days 5. Secretary, Department of Rural Development Reviews States' Preparedness for Rollout of VB–G RAM G Act, 2025, PIB — pre-rollout State preparedness review