Examine the fiscal federalism challenges in the implementation of centrally-legislated, State-executed employment guarantee schemes in India, with reference to VB–G RAM G Act, 2025.

Q. Examine the fiscal federalism challenges in the implementation of centrally-legislated, State-executed employment guarantee schemes in India, with reference to VB–G RAM G Act, 2025. (15 marks, 250-350 words)

The VB–G RAM G Act, 2025, in force across rural India from 01.07.2026 and repealing MGNREGA, 2005 [1], is enacted by Parliament but delivered by States. This split between legislative authorship and executive burden generates distinct fiscal federal frictions.

Asymmetric cost-sharing - For FY 2026–27 the Central share is ₹95,692.31 crore, while the total outlay including State share is likely to exceed ₹1.51 lakh crore [1] — States must finance nearly a third of a law they did not draft. - The guarantee being demand-driven, and raised from 100 to 125 days per household [2], States with greater rural distress carry a larger, open-ended and unbudgetable liability.

Statutory obligation without commensurate autonomy - Every State/UT was required to notify its own State Scheme; all have complied [3] — compliance federalism rather than negotiated federalism. - The unemployment allowance, payable when work is not provided within the stipulated time [2], is a statutory cost that falls on State administration for failures often rooted in central fund flow. - Permissible works fall under Schedule I, approved centrally, though States may propose locally relevant additions [4].

Fund-flow and payment architecture - Utilisation and wage release follow Muster Roll closure and FTO generation [3]; any lag in central reimbursement forces States to bridge wage arrears from their own resources. - Transition from the MGNREGS platform required sustained Centre–State coordination, reviewed by the Department of Rural Development before rollout [4].

Elements of flexibility - States may notify an aggregated 60-day pause period to protect peak sowing and harvesting labour supply, with the full 125-day guarantee preserved [2] — a genuine, if narrow, space for State discretion.

The Act's success therefore rests less on its enhanced guarantee than on predictable, timely fiscal transfers. Institutionalising a joint Centre–State review of cost-sharing norms, and front-loading releases against demand projections, would convert statutory compliance into genuine cooperative federalism — the spirit in which Article 246 and Concurrent-List welfare legislation is best worked.

(~320 words)

Sources: 1. VB-GRAM Act 2025 Guarantees 125 Days of Rural Employment to Drive Viksit Bharat Vision, PIB — repeal of MGNREGA, 2005; ₹95,692.31 crore Central share and ₹1.51 lakh crore total outlay 2. VB-G RAM G Act to Come into Force from July 1, 2026, PIB — 100 to 125 days guarantee, unemployment allowance, 60-day pause period 3. VB-GRAM-G Scheme, PIB — all States/UTs notified State Schemes; Muster Roll closure and FTO-based payment release 4. Secretary, Department of Rural Development Reviews States' Preparedness for Rollout of VB–G RAM G Act, 2025, PIB — Schedule I works list, Centre–State coordination on transition