The replacement of MGNREGA by the VB-G RAM G Act marks a shift from a demand-driven right to a normatively funded guarantee. Critically examine its implications for the right to work and fiscal federalism.

Under MGNREGA (2005), rural work was a demand-driven legal right: central funds grew as demand grew. The VB-G RAM G Act, 2025 raises the guarantee to 125 days. It funds it through a normative allocation fixed by the Centre, shared 60:40 with the States [1]. This improves planning but weakens the right in bad years, and it shifts the risk to the States.

Implications for the Right to Work

Gains

• More days on paper: 125 days instead of 100. The unemployment allowance after 15 days is kept [1].
• Fewer leakages: biometric checks, geo-tagging and six-monthly social audits target works "not found on the ground" [1].
• Farm-season pause of up to 60 days keeps farm labour available [1].

Concerns

• The ceiling was never the limit: households averaged about 48 days, and fewer than 10% completed 100 days [3].
• Weak enforcement: only about 8% of the allowance owed was paid in 2019-25 [3]. States now pay for both excess work and the allowance [2]. A State short of money may simply not register demand.
• Low wages: the Standing Committee (2024) found wages inadequate because they still use a 2009-10 base year [3].

Implications for Fiscal Federalism

Gains

• Predictable budgets. Cost-sharing gives States a reason to prevent misuse [1].
• Cushions: 90:10 sharing for NE and Himalayan States, the admin cap raised from 6% to 9%, and a promise of extra help in disasters [1].

Concerns

• Cost shift: the Centre earlier bore about 90% of spending [3]. States now owe about ₹55,590 crore of the ₹1,51,282 crore yearly need [1].
• Crisis cushion lost: spending rose 55% in 2020-21 during COVID-19 [3]. Any excess over the allocation now falls on the States [2].
• Capacity trap: the Economic Survey 2023-24 linked work provided to each State's capacity [3]. Poorer States have the least money and the fewest staff, with one Panchayat Secretary for 17 GPs on average [3].

The Act addresses MGNREGA's real problems of leakage and weak planning. However, a funding cap cannot fix weak State capacity. The way forward:

• time-stamped demand registration that triggers the allowance automatically;
• a clear rule for central top-ups in a crisis;
• a revised wage base year;
• using the higher admin cap to staff panchayats.

With these fixes, the guarantee can honour Article 41, cooperative federalism and SDG 8 on decent work.