The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), one of the world’s largest employment guarantee programmes, saw sharp contraction in scale and reach during 2025-26, according to a report by NREGA Sangharsh Morcha and LibTech India. Total person-days of work generated fell by 21.5 percent — from 268.44 crore in 2024-25 to 210.73 crore in 2025-26 — even as the number of registered households rose marginally. The number of households completing the full guaranteed 100 days of work declined by 40.5 percent. LibTech estimates an average income loss of ₹1,221 per MGNREGS household.
This contraction is occurring simultaneously with a major policy transition: the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (replacing MGNREGS), passed in Parliament last December with only ₹30,000 crore allocated for the transitional period — significantly below what the full MGNREGS budget had historically been. The Union government has allocated ₹30,000 crore for the transition, against a backdrop of 44 lakh fewer households and 67 lakh fewer workers being employed compared to the previous year.
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For UPSC aspirants, this issue spans constitutional rights frameworks (whether employment guarantee is a statutory right), fiscal federalism (MGNREGS is centrally funded but state-implemented), rural development policy, gender economics (MGNREGS has historically had high female participation), and the governance of large-scale welfare scheme transitions.
Background and Context: MGNREGS Architecture and Historical Performance
MGNREGS was enacted in 2005 under the UPA government through the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA). It guarantees 100 days of unskilled manual work per year to any rural household whose adult members demand it. The scheme operates as a demand-driven right — unlike supply-side schemes where beneficiaries depend on government willingness. Payment must be made within 15 days of work completion, failing which unemployment allowance is due.
Five Important Key Points
- MGNREGS 2025-26 generated only 210.73 crore person-days of work — a 21.5 percent decline from 268.44 crore in 2024-25 — with 44 lakh fewer households and 67 lakh fewer workers employed, representing a significant erosion of the scheme’s protective function during a period of rural economic stress.
- Fifteen out of 20 States recorded a decline in person-days, with Tamil Nadu registering the steepest drop of 42.8 percent and Haryana at 41.7 percent, while West Bengal generated no person-days in either year — suggesting systemic data and administrative anomalies in the state’s MGNREGS implementation.
- The Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, which is set to replace MGNREGS, was passed without public consultation — a process deviation from MGNREGS’s own legislative history, which involved extensive civil society engagement and pilot testing.
- The government’s transitional allocation of ₹30,000 crore for MGNREGS during the transition period represents a significant under-budgeting concern, given that MGNREGS peak demand years required ₹98,000 crore (2020-21 COVID year) and even normal years required ₹60,000-73,000 crore.
- LibTech’s research estimates that the contraction in MGNREGS 2025-26 resulted in an average income loss of ₹1,221 per registered household — a figure that, aggregated across 15 crore households, represents a massive withdrawal of rural purchasing power at a time of agrarian stress.
Constitutional and Legal Framework: Is Employment a Fundamental Right?
MGNREGS is a statutory right under Article 21 as interpreted by the Supreme Court in the right-to-livelihood jurisprudence (Olga Tellis v. Bombay Municipal Corporation, 1985). However, it is not a fundamental right under Article 19(1)(g) (right to practise any profession or carry on any trade) — that applies to economic activity, not guaranteed employment. The MGNREGA’s legal architecture makes it a conditional statutory entitlement: the right to demand work exists, but the state’s obligation to provide it is subject to administrative capacity and budgetary allocation.
This legal structure creates a gap: when MGNREGS is replaced by the new Viksit Bharat Rozgar Mission, the continuity and enforceability of the employment guarantee right will depend on the new Act’s specific provisions. If the new scheme introduces conditionalities, skill prerequisites, or demand-verification requirements not present in MGNREGA, the effective coverage could narrow further.
Fiscal Federalism and State Implementation Challenges
MGNREGS is funded 100 percent by the Centre for wages and 75 percent for material costs, with states bearing 25 percent of material costs and administrative expenses. This creates a fiscal dependency that makes scheme performance sensitive to central disbursement timelines. Delayed Fund Transfer Orders (FTOs) to states have historically been a major cause of payment delays and reduced demand.
The contraction in 2025-26 likely reflects multiple factors: reduced central budget allocation (₹86,000 crore budgeted but historically requiring supplementary demands), delayed payments discouraging workers from registering demand, administrative tightening in the wake of audit findings, and the political signal of the incoming scheme reducing local implementation urgency.
Gender Dimensions of MGNREGS Contraction
MGNREGS has historically maintained female participation rates of around 55-57 percent of total person-days — significantly above the mandatory 33 percent — making it one of India’s most gender-inclusive employment programmes. The scheme’s equal wage provision (same wage for men and women for the same work) has had positive spillover effects on rural wage norms. A 21.5 percent contraction in total person-days disproportionately affects women who depend on MGNREGS as often their primary or sole source of formal employment. This has direct implications for women’s economic autonomy, household food security, and child nutrition outcomes in rural areas.
The New Viksit Bharat Rozgar Mission: What Is Known
The Viksit Bharat Rozgar and Ajeevika Mission (Gramin) Act, 2025, passed in December, is the successor scheme. Details of its operational guidelines remain limited in public domain, which itself is a governance concern — schemes of this scale require extensive front-end communication to potential beneficiaries, gram panchayats, state governments, and implementing officers before launch. The NREGA Sangharsh Morcha’s concern about the absence of public consultation mirrors the experience of other welfare scheme transitions where beneficiary communities are the last to learn about changes.
The new scheme’s title — “Viksit Bharat Rozgar and Ajeevika Mission” — suggests a broader orientation beyond guaranteed employment toward livelihood promotion, potentially signalling a shift from demand-driven entitlement to supply-side skill and opportunity creation. While this orientation is not inherently wrong, the transition must be managed carefully to avoid a coverage vacuum.
Way Forward
The government must ensure full payment of MGNREGS wage arrears before the scheme transition, as unpaid wages create immediate hardship and legal liability under the Act. The new Viksit Bharat scheme’s operational guidelines should be published in draft for a 90-day public comment period before finalisation. The transitional allocation of ₹30,000 crore must be supplemented through supplementary demands if employment demand materialises at historical levels. Gender participation targets from MGNREGS should be explicitly carried forward into the new scheme. An independent transition monitoring committee, including representatives from NREGA Sangharsh Morcha and LibTech India, should be constituted to track coverage continuity.
Relevance for UPSC and SSC Examinations
UPSC GS-II: Government schemes, welfare policy, fiscal federalism; GS-III: Indian economy, rural development, employment, poverty alleviation. Essay: “The Promise and Limits of Employment Guarantee as a Development Strategy.” SSC: Government schemes, general awareness. Key terms: MGNREGA, Person-Days, Fund Transfer Order, Viksit Bharat Rozgar Mission, LibTech India, Right to Livelihood, Olga Tellis Case, Fiscal Federalism, Gender Parity in Employment.