Examine the federal dimensions of the VB-G RAM G Act, 2025 with reference to the changed cost-sharing pattern and its potential impact on State finances.

Q. Examine the federal dimensions of the VB-G RAM G Act, 2025 with reference to the changed cost-sharing pattern and its potential impact on State finances. (15 marks, 250 words)

The VB-G RAM G Act, 2025, which replaces MGNREGA from 1 July 2026, recasts India's rural employment guarantee on cooperative-federal lines — devolving delivery to Gram Panchayats while shifting a large share of the wage burden onto States [1][2]. This makes its federal design as consequential as its welfare promise.

Changed cost-sharing pattern - MGNREGA funded 100% of unskilled wages centrally; VB-G RAM G moves to a 60:40 Centre-State split for general States and 90:10 for North-Eastern/Himalayan States [1][2]. - Legislated under Concurrent List Entries 23–24 (social security, labour welfare), the Centre invokes Union legislative competence to bind States to co-financing [2]. - Delivery is decentralised — Gram Panchayats plan works; Central and State Gramin Rozgar Guarantee Councils coordinate — reflecting genuine multi-level federalism [2].

Potential impact on State finances - The new 40% wage liability strains fiscally weaker States; Telangana and Andhra Pradesh have flagged an added burden [1]. - A demand-driven programme now carries open-ended State exposure, since work intensity spikes in drought years — precisely when State revenues fall. - Weaker States may ration work to contain costs, diluting the statutory right and widening inter-State disparities. - The 60-day agricultural pause and normative allocations partly cap outgo but reduce fiscal-stabiliser flexibility [2].

Aligning fiscal responsibility with delivery can strengthen accountability, but only if the 16th Finance Commission and enhanced grants cushion poorer States — ensuring cooperative federalism does not become an unfunded mandate.

(~250 words)

Sources: 1. Viksit Bharat–G RAM G Act 2025 — Reforming MGNREGA (PIB, Ministry of Rural Development) — 60:40/90:10 cost-sharing, 125 days, commencement, State financial burden 2. The VB–G RAM G Bill, 2025 (PRS Legislative Research) — Concurrent List basis, Gramin Rozgar Guarantee Councils, Gram Panchayat planning, 60-day agricultural pause, normative allocations