The Central government on Monday notified the implementation of the new Rural Employment Act, Viksit Bharat – Rozgar and Ajeevika Mission Guarantee (Gramin), (VB-GRAMG), 2025, replacing the nearly two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The new framework is scheduled to come into force nationwide from July 1, 2026. A notification is an official government order that gives legal force to the law. Once notified, countries must begin preparing their systems, staff and plans to roll out the new framework on the ground from the specified date.
VB-GRAMG was introduced in the Lok Sabha on December 16, 2025, passed by the Lok Sabha on December 18, and was approved by the Rajya Sabha shortly after midnight on December 19. It received presidential approval on December 21, 2025. The Ministry of Rural Development (MoRD) informed this on Monday and set July 1, 2026 as the date for its nationwide implementation.
The MGNREGA Act, enacted in 2005, guarantees 100 days of paid employment to every rural family annually. Under this law, states submitted annual action plans based on demand at ground level, and the Center was bound to release funds accordingly. The new law changes the number of guaranteed working days and the method of allocating funds between the Center and the states.
The VB-GRAMG Act guarantees every eligible rural household up to 125 days of unskilled paid manual labor in a financial year – an increase of 25 days from MGNREGA.
Apart from the increase in days, the way money is allocated is also changing. Under MGNREGA, states submitted annual action plans based on ground-level demand, and the Center was bound to release funds accordingly – making it an open-ended commitment. Under the new law, the central government will fix the state-level benchmark allocation – a fixed expenditure ceiling – for each financial year. Any expenditure by the State beyond this allocation shall be borne by the State Government itself. The law does not specify the criteria that will be used to establish these maximum limits, but rather says that the central government will determine them later through rules.
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Cost sharing follows a 60:40 formula between the Center and the states, with higher central support for the northeastern and Himalayan states and full funding for union territories without legislatures. Total annual spending is estimated at approximately $1.51 lakh crore, including state contributions, with the Center’s share expected to be around $95,700 crores.
Under the new law, all work will have to be drawn from the Vixit Gram Panchayat Plan (VGPP) and compiled at top administrative levels into the Vixit Bharat National Rural Infrastructure Package – which links village-level employment directly to the Prime Minister’s Jati Shakti-linked National Infrastructure Planning Framework.
According to the new law, all work must be performed directly by workers; Private contractors are not allowed to carry out any project. Machines that replace manual labor should be avoided as much as possible. For every rupee spent in the district, not less than 60 paise should go towards wages and not more than 40 paise for materials. When assets are built for individual families – such as a well or a farm pond – priority should be given to families from Scheduled Castes, Scheduled Tribes, women-headed households, and persons with disabilities.
Under the new law, if a worker applies for work and the government fails to provide it within 15 days, the state government must pay daily unemployment allowance for every day the worker remains without work. This provision also existed under MGNREGA, but the workers who were deprived of their jobs never got the bonus to which they were legally entitled. Under the new law, the same obligation continues, with stronger accountability mechanisms. Social audits are required at least twice a year, supported by real-time dashboards, GPS-based monitoring, and digital attendance systems. The ceiling on administrative expenses was also raised from 6% to 9%.
