MGNREGA to be scrapped? New Bill proposes 125-day guarantee, but adds 60-day ‘pause’ during peak farm season

The Bill has been circulated among Lok Sabha members and is likely to be introduced in the House,

The government has circulated among Lok Sabha members a draft Bill that seeks to repeal the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and replace it with a new rural employment law titled the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Bill, 2025, a source told PTI.

The Bill also changes the funding architecture, moving away from the current model where the Centre bears the entire unskilled wage bill under MGNREGA, and replacing the labour budget with a state-wise “normative allocation” decided by the Centre, according to The Indian Express.

The Bill proposes 125 days of wage employment in a financial year for every rural household whose adult members volunteer for unskilled manual work, The Indian Express reported.

Under the current MGNREGA framework, the law provides for “not less than one hundred days” of work, though 100 days has effectively become the standard cap in implementation, The Indian Express reported, citing system constraints.

A key shift is proposed in who pays for wages. The VB-G Ram G Bill introduces a fund-sharing pattern between the Centre and states for wage payments, unlike MGNREGS where the Centre pays the entire wage bill for unskilled manual work, The Indian Express reported.

Section 22(2) of the Bill proposes a 90:10 split for northeastern states, Himalayan states and certain Union Territories (Uttarakhand, Himachal Pradesh, and Jammu and Kashmir), and a 60:40 split for other states and Union Territories with legislatures, The Indian Express reported.

For Union Territories without a legislature, the Centre will bear the entire scheme cost.

The Bill proposes moving to a state-wise “normative allocation” determined by the Central government each year “based on objective parameters”, The Indian Express reported.

It also states that any spending beyond the normative allocation would be borne by the state government, in a break from MGNREGA’s labour-budget approach that is tied to expected demand, The Indian Express reported.

For the first time, the Bill proposes pausing employment guarantee work during peak agricultural seasons to ensure farm labour availability, The Indian Express reported.

States would be required to notify, in advance, a total period aggregating to 60 days in a financial year, covering sowing and harvesting, during which no work will be commenced or executed under the Act. States can issue area-specific notifications based on agro-climatic zones and local farm activity patterns, according to The Indian Express.

The provision effectively shortens the working window for households seeking to complete the full 125 days.

The Bill envisages wage payments on a weekly basis, or in any case not later than a fortnight after the work is done, The Indian Express reported.

Under MGNREGA, wages are to be paid within 15 days of closure of the muster roll, with compensation payable for delays beyond the 16th day at 0.05 percent of unpaid wages per day. The Indian Express reported that the new Bill retains compensation for delayed payments, while also stating wages will follow rates notified under Section 6 of MGNREGA.

The Bill has been circulated among Lok Sabha members and is likely to be introduced in the House, the source told PTI.

The Winter Session of Parliament began on December 1 and will conclude on December 19.

Earlier, Moneycontrol reported on December 12, that the Cabinet may approve a proposal to rename MGNREGA as the 'Pujya Bapu Rural Employment Guarantee Bill 2025.'

Original context point: The combination of higher guaranteed days and a capped 'normative allocation' model creates a built-in tension: if demand spikes mid-year, states may face a direct fiscal choice, fund extra work from their own budgets or restrict approvals, a shift from MGNREGA’s demand-driven logic.