SBI Research backs VB-G RAM G as a game changer, calls for reorientation of state spending  

In a significant policy shift, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is being overhauled under the new VB-G RAM G framework, aiming to improve employment outcomes and asset creation in rural India. SBI Research, in its latest report, termed this transition “a stepping stone” toward responsive and equitable rural development, backed by “jan bhagidari” or participatory governance.

The revamped scheme raises the guaranteed employment days from 100 to 125 and introduces a structured framework for fund allocation — moving from a demand-driven approach to a normative assessment based on equity and efficiency.

Under the proposed FY27 design, central assistance is projected to reach ₹96,000 crore. While the Centre’s funding ratio will drop from 90:10 to 60:40 for most states, SBI Research dismissed fears of added fiscal stress for states, citing underutilized borrowing capacities and calling instead for a “reorientation of state expenditure toward productive needs”.

A hypothetical analysis shows that most states will emerge as net gainers — Uttar Pradesh, Maharashtra, Bihar, Chhattisgarh, and Gujarat being among the biggest beneficiaries. States could gain nearly ₹17,000 crore more under the new formula compared to past MGNREGA allocations.

Key changes include a 60-day pause for agricultural seasons, biometric-linked work allocation, spatial technology-based planning, and mandatory unemployment allowances. The number of work categories has also been rationalized into four: water security, core rural infrastructure, livelihood infrastructure, and climate resilience.

SBI highlighted the inefficiencies in the current scheme, stating that up to 1.22 crore households lost employment opportunities in FY25 due to structural and operational gaps. The average wage rate has grown to ₹267 per day, but the report flagged inconsistencies between notified and actual wages paid in several states, including Telangana and Rajasthan.

The report underscores the untapped potential of Gram Panchayats, whose enhanced role under VB-G RAM G is expected to reduce misappropriation and boost execution quality. As of FY26, 9,280 Panchayats reported nil expenditure — an issue the scheme aims to fix through bottom-up planning.

With women's participation already at 58% and social audits mandated, the scheme positions itself as a more accountable, inclusive, and future-ready employment generator.