‘A bill to destroy MGNREGA’: Why experts fear the worst from new job guarantee bill

Thirty-five-year-old Haroli Shekhar lives in a village in Raichur, one of Karnataka’s poorest districts.

Every day, seven members of his large family of landless labourers go out seeking work. Sometimes, they labour at construction sites, but most of the time they end up finding work under the Mahatma Gandhi National Rural Employment Guarantee Act.

The landmark law was enacted by the Congress-led United Progressive Alliance government in 2005. It made the government legally bound to provide at least 100 days of work to every rural household that demands it, failing which it must pay them an unemployment allowance.

Shekhar, a resident of Heerapur village, said he sometimes has to wait a month or two to get work under the scheme and payment is often delayed. Even so, he manages to earn Rs 15,000 a year through MGNREGA. “I mostly dig trenches or help in building canals for irrigation in the area around my village,” he told Scroll.

The major benefit, he said, is that he gets to live in his village with his two children, rather than move to distant cities for work.

On Monday, with the Narendra Modi government proposing a new bill to replace the law, Shekhar’s safety net might be under threat.

Experts Scroll spoke to said the new bill removes several key provisions of the rural employment guarantee, such as the power of gram panchayats to allocate work in response to demands from workers.

It consolidates decision-making with the central government, while transferring greater financial burden on to the states. It even proposes to give the Centre the power to decide in which region or area it wants to allocate work and how much funds a state should be sanctioned.

Economist Jean Dreze said the new law “is all set to destroy MGNREGA in the guise of revamping it as a new scheme”.

“It provides a work guarantee without any guarantee that the guarantee applies,” he added.

Chakradhar Buddha, a researcher with LibTech India, a coalition that works to improve public service delivery, agreed with Dreze. “This was the first programme which guaranteed employment in the country,” said. “But if the new bill is passed, people will not get jobs if they demand it. They will get jobs if the central government has the budget and thinks it fit to give work in their village.”

He added: “With this, we are going back to pre-NREGA days.”

For states, fewer rights, greater burden

The central government plans to replace the rural employment guarantee law with the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB–G RAM G, Bill, 2025.

The bill increases the minimum number of guaranteed work days from 100 to 125.

But the most contentious part of the bill relates to the powers that the central government has kept for itself.

Section 4 (5) of the bill states. “The Central Government shall determine the State-wise normative allocation for each financial year, based on objective parameters as may be prescribed by the Central Government.”

“NREGA was a demand-based scheme that determined work allocation,” said Nikhil Day, rural activist and founder of Mazdoor Kisan Shakti Sangathan. “Through this section, the government ends that demand. Now the central government will decide the allocation.”

Moreover, the work will be planned under Viksit Gram Panchayat plans, which will be prepared by local gram panchayats, but only after approval by the central government. This effectively reduces the power of gram panchayats to formulate work orders.

The funding pattern has also changed, to the detriment of states.

Under the existing scheme, the Centre paid 100% of the wages and 75% of material cost.

According to the new bill, the Centre will provide 60% of funds to all states, apart from the ones in the North East. The rest has to be borne by the state governments. In the North East and in Uttarakhand, Himachal Pradesh and Jammu and Kashmir, the Centre will pay 90% of the wages.

“The new scheme is just another centrally-sponsored scheme with 60:40 cost-sharing, at the discretion of the central government,” said Dreze.

State governments can only decide on procedures to maintain accounts of labourers and expenditure related to implementation of the scheme.

If the state spends in excess of the funds allocated by the Centre, it will have to bear the cost, as per procedures laid down by the central government, the bill says.

Dey pointed out that if states are forced to pay more under the scheme, they may no longer be able to afford it or prioritise work under the scheme for people.

John Brittas, Rajya Sabha Member of Parliament from Kerala, said on the social media platform X that if the new bill is implemented, “states will have to shell out around Rs 50,000+ crore. Kerala alone will have to bear an additional Rs 2,000-2,500 crore”.

For Venkateswarlu Kuruva, a social activist based in Raichur, the whittling down of state powers is a clear reason to worry.

He lives in Karnataka, a state run by the Congress, the party that sits in Opposition at the Centre. “People will lose the right to work and earn” if this comes into effect, he said.

‘Landlords back in feudal control’

Several experts told Scroll that the new law will lead to inequitable access to employment and incentivise distress migration.

For instance, Section 5 of the bill states that the Centre will pick rural areas in every state where work will be provided.

In Raichur, Kuruva said that after MGNREGA was implemented in 2005, there was a decline in migration and people began to work near their home. “But now if a particular village is not listed for work allocation, people may be forced to move to cities for work,” he said. “That will be the worst possible outcome.”

The bill also proposes a 60-day pause on guaranteed work during agricultural seasons. The government has reasoned that this will “facilitate adequate farm-labour availability during peak agricultural seasons”.

Experts pointed out that this puts farm labourers at a disadvantage.

The rural employment guarantee scheme not just acted as a cushion, but also empowered them to bargain for better wages during peak agricultural seasons. “If there is a clause that there will be no work at all during that time, then labourers will lose the bargaining power,” Dey said.

Buddha, from LibTech, said, “MGNREGA destroyed the dependence of labourers on landlords. But this bill effectively destroys that privilege for at least two months.”

Dey added: “It will put landlords in feudal control, and can lead to exploitative wages.”

The digital burden

As Scroll has reported, the Modi government’s insistence on biometric attendance and mandatory Aadhar-based payments has derailed the scheme and squeezed out workers.

The new bill increases the digital burden on workers.

It proposes to track attendance and payments with the help of artificial intelligence and dashboards.

Buddha, the researcher from LibTech, said that the introduction of technology had already squeezed workers out of the scheme.

For instance, he said, mandatory online Know Your Customer, or e-KYC, verification, led to the deletion of at least 27 lakh workers between October 10 and November 14. The new bill may push more needy beneficiaries away from the scheme if there is a tech failure in remote rural areas.

Kuruva, who has been helping workers get re-registered after their names were deleted due to e-KYC, said, “Technology has been stripping away the right to earn”.