Why the government dropped MGNREGS: Economic Survey spells out the reasons

Making NREGA more productive

The government’s decision to replace the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) stems from deep-seated structural and implementation failures, despite the programme’s success in boosting rural incomes and assets, the Economic Survey said on January 29.

While acknowledging that MGNREGS played a critical role in enhancing rural incomes, improving village connectivity and accelerating digital adoption, the Survey flagged persistent gaps between intent and execution across states.

“Monitoring in several states revealed gaps, including work not being done on the ground, expenditure not matching physical progress, the use of machines in labour-intensive work, and frequent bypassing of digital attendance systems,” the Survey noted.

The Survey argued that although MGNREGS expanded participation and improved transparency through digitisation, structural weaknesses in accountability and outcomes remained unresolved. In many instances, spending failed to translate into durable asset creation or productivity gains, while leakages and poor monitoring diluted the programme’s effectiveness as a safety net.

Against this backdrop, the government has enacted the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, or the VB G-RAM G Act, 2025, marking a statutory overhaul of rural employment policy.

According to the Survey, the new framework seeks to align rural employment with the government’s long-term vision of Viksit Bharat 2047, while tightening accountability and focusing more sharply on infrastructure outcomes and income security.

The VB G-RAM G Act, the Survey said, represents a decisive shift in approach, addressing operational shortcomings of MGNREGS through a more modern, accountable and outcome-oriented framework.