'Previously, contributing only 25 per cent of material costs, states now face burdens of 40 per cent to 100 per cent of total costs, ensuring poorer states will curb project approvals, directly stifling work demand.'
One of the most contentious provisions of the new rural employment Bill -- which seeks to replace the 20-year-old MGNREGA -- is that it empowers the states to pause the scheme for 60 days of their choice during peak sowing and harvest seasons.
The Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Bill, which was passed by Parliament drew flak from several quarters over this provision.
A section of civil society claimed that it will reduce the bargaining power of manual casual labour, as MGNREGA acted as a safety net and a fall-back option if farms did not give them a better deal in terms of wages.
Data shows that typically, work demand for MGNREGA dipped from July to November in each financial year, coinciding with peak kharif and rabi sowing and harvest seasons across most parts of India.
This was also the time when perhaps farms offered better wages to these workers during sowing or harvesting time, or MGNREGA wages were so low that they were not the first choice for workers and only acted as a safety net in times of crisis.
With this safety net gone, civil society groups and activists say that it could open the labour market to exploitation.
The government, however, said that the two-month pause in work will have to be aggregated and not continuous and will prevent labour shortages during critical farm operations and avoid labour being diverted away to guaranteed-wage worksites.
This, in turn, would prevent wage inflation, as stopping public works during peaks prevents artificial wage inflation that raises food production costs.
The argument also is that with machines being extensively used in farms nowadays across India, the use of manual labour for agriculture activities is going down with each passing day.
Meanwhile, a group of eminent economists from across the world wrote an open letter to the government in support of MGNREGA, saying that the current shift to devolve the scheme to states and without commensurate fiscal support, will threaten MGNREGA's existence.
They included Thomas Piketty, professor at the Paris School of Economics and co-director of the World Inequality Lab and World Inequality Database; Joseph E Stiglitz, University Professor and Nobel Laureate, Columbia University, Darrick Hamilton from the Henry Cohen Professor of Economics and Urban Policy, New School for Social Research and Mariana Mazzucato, Professor and Founding Director of the University College London, Institute for Innovation and Public Purpose.
The letter says that states lack the central government's financial capacity and the new 60:40 funding pattern creates a catastrophic Catch-22 where states will bear legal liability for providing employment, while central financing is withdrawn.
'Previously, contributing only 25 per cent of material costs, states now face burdens of 40 per cent to 100 per cent of total costs, ensuring poorer states will curb project approvals, directly stifling work demand,' the letter said.
It added that structural sabotage is compounded by discretionary 'switch-off' powers, which allow the scheme to be suspended arbitrarily and render the guarantee meaningless.
Leader of Opposition in the Lok Sabha Rahul Gandhi in a post on X accused the government of demolishing 20 years of MGNREGA in a single day, and dubbed the new VB-G RAM G legislation as 'anti-village'.
'It demolishes the rights-based, demand-driven guarantee and turns it into a rationed scheme which is controlled from Delhi. It is anti-state and anti-village by design.'
MGNREGA, Rahul said, gave the rural worker bargaining power.
Asserting that MGNREGA was among the most successful poverty alleviation and empowerment programmes in the world, Gandhi said, 'We will not let this government destroy the rural poor's last line of defence. We will stand with workers, panchayats, and states to defeat this move and build a nationwide front to ensure this law is withdrawn.'
To this the ruling BJP countered by saying that the new bill passed by Parliament is not about removing social safety nets but modernising them and asked Rahul Gandhi to 'educate himself' instead of spreading 'misinformation' about the scheme.
On Friday, legislators and activists staged a symbolic protest at Delhi's Jantar Mantar.
Jean Dreze, Rajendran Narayanan, Mukesh and others were joined by MPs Sasikanth Senthil of the Congress, S Murasoli and Thanga Tamil Selvan of the DMK, Bikash Bhattacharya of the CPI(M), and Raja Ram Singh of the CPI(ML) Liberation.
TMC MPs, meanwhile, held an overnight dharna in the Parliament complex against the passage of the G RAM G Bill, which they said was 'bulldozed' through both Houses without any discussion.
Punjab Chief Minister Bhagwant Mann announced on Friday that the state government will convene a special assembly session on the issue in the second week of January.
State-Wise MGNREGA wage rates compared to average wages of general agriculture workers (male) and Minimum Wages
In Rs/Day
#State/UT-wise daily wage rates for unskilled workers under Mahatma Gandhi NREGS for the Financial Year 2024-25 & State wise average daily wage rates in rural areas for general agricultural workers ( male). Yearly average wage rate has been calculated from monthy average wage rates
**Daily Minimum Wages of unskilled workers as per 2018-2019 data
Source: MGNREGA website, RBI, and Economic Survey 2018-2019
Feature Presentation: Ashish Narsale/Rediff
© 2026