Big change in rural jobs scheme: Centre replaces MGNREGA with VB-GRAMG from July 1
The Centre has notified the new VB-GRAMG law, replacing MGNREGA from July 1. The new rural employment scheme guarantees 125 days of work and introduces major funding and monitoring changes
PTC Web Desk: The Central Government on Monday officially notified the implementation of the Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-GRAMG, 2025, which will replace the nearly 20-year-old Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
The new law will come into force across the country from July 1, 2026. With the notification now issued, states have been asked to start preparing their staff, systems and development plans for the rollout of the new framework.
The VB-GRAMG Bill was introduced in the Lok Sabha on December 16, 2025. It was passed in the Lower House on December 18 and later cleared by the Rajya Sabha after midnight on December 19. The President’s approval was received on December 21, 2025.
MGNREGA, which was introduced in 2005, provided 100 days of guaranteed wage employment to rural households every year. The new law increases this limit to 125 days of unskilled manual work for eligible families.
One of the biggest changes under the new system is the method of fund allocation. Under MGNREGA, states used to submit work demands and the Centre had to provide funds accordingly. Under VB-GRAMG, however, the Centre will fix a spending limit for every state each financial year.
If any state spends more than the amount fixed by the Centre, the extra cost will have to be paid by the state government itself. The law currently does not mention the exact basis on which these spending limits will be decided. The Centre will define the rules later.
The scheme will continue with a 60:40 funding formula between the Centre and the states. Northeastern and Himalayan states will receive higher support from the Centre, while Union Territories without legislatures will get full Central funding.
The total yearly budget for the scheme is expected to be around Rs 1.51 lakh crore, including contributions from states. The Centre’s estimated share is around Rs 95,700 crore.
Under the new framework, every project must be included in a Viksit Gram Panchayat Plan (VGPP). These village-level plans will later become part of a national rural infrastructure network connected to the PM Gati Shakti programme.
The law also clearly states that work must be carried out mainly through manual labour. Contractors will not be allowed to execute projects and the use of machines that reduce labour work should be avoided as much as possible.
The wage-material ratio has also been retained. At least 60% of the money spent in a district must go towards workers’ wages, while material costs cannot exceed 40%.
For projects meant for individual households, such as wells or farm ponds, preference will be given to Scheduled Castes, Scheduled Tribes, women-headed families and persons with disabilities.
The unemployment allowance provision has also been retained. If a worker applies for a job and the government fails to provide work within 15 days, the state government will have to pay unemployment allowance for each day of delay.
The new law also focuses on stronger monitoring and transparency. Social audits will now be mandatory at least twice every year. Real-time dashboards, GPS tracking and digital attendance systems will be used for better monitoring of projects and workers.
In another key change, the limit for administrative expenses has been increased from 6% to 9% under the new law.