Why MGNREGA, in G Ram G avatar, could be new pain point in Centre-state ties

With its bid to replace the UPA-era Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with a new law, Prime Minister Narendra Modi’s government has set off a fresh conflagration in Centre-State relations.

Also read | Why Centre’s plan to remove Mahatma Gandhi from MGNREGA has triggered a political storm

The acrimony isn’t focused just around the title of the proposed law, as anticipated earlier amid reports of the Centre’s plan to replace Mahatma Gandhi with Pujya Bapu in the title of the 2009 version of the Act, but on a more sinister ploy that would significantly dent the already depleted coffers of many states, particularly those ruled by the Opposition.

Employment guarantee rebranded

Contrary to earlier reports, the new law will not be called Pujya Bapu Gramin Rozgar Yojana. The Centre has removed any reference to the Father of the Nation in the Act. Instead, by naming the proposed law Viksit Bharat- Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill 2025 – or the VB- G-RAM-G Bill – the Centre has picked an acronym that shrewdly introduces in legislation a distinctly colloquial Hindu iconography indistinguishable from the ruling BJP’s politics.

The Centre’s move to drop the Mahatma Gandhi suffix is expected to trigger a furore by the Opposition, particularly by the Congress party, but the saffron party can be relied upon to bulldoze such protestations by arguing that its rivals have a problem with a title that invokes Lord Ram, as they are essentially anti-Hindu and anti-Sanatan.

The more substantive problems with the G-RAM-G Bill, however, go well beyond its nomenclature. The Bill comes at a time when multiple Opposition-ruled states have been protesting against inadequate fund allocation by the Centre towards MGNREGA and long delays in the Centre clearing dues owed to these states towards their MGNREGA wage bill.

The proposed law does nothing to address these long-held grudges of Opposition-ruled states, the most vocal among them being Trinamool Congress-led Bengal, which is due for Assembly polls early next year. Instead, the Bill turns the entire spirit of the original NREGA legislation on its head by turning the employment guarantee law from one that is entirely Centre-funded to one that will now be only partly funded by the Centre.

Centre shifts funding burden

The Bill stipulates a new funding pattern wherein the Centre will foot only 60 percent of the wage bill for states (excluding north-eastern states, Uttarakhand, Himachal Pradesh, Jammu & Kashmir and Union Territories without legislatures). The balance 40 percent will have to be paid by the respective provincial governments. For north-eastern states, Himalayan states and UTs with legislature (like J&K and Pondicherry), the Centre will foot 90 percent of the wage bill while the rest will have to be borne by the respective state/UT governments. The Centre will bear the full expenditure under the proposed law only for Union Territories without a legislature.

The additional expenditure that states will be required to make towards wages becomes all the more troublesome because the proposed law doesn’t provide any relief to states on the other expenses that they have to bear anyway while implementing MGNREGA. Under the original Act, the states already foot the cost of unemployment allowance, one-fourth of the material cost of the scheme and administrative expenses.

Also read | MGNREGA renaming sparks Opposition charge of Hindi imposition

As such, the fiscal burden that the proposed Bill will put on states, which are often hard-pressed for funds and depend heavily on timely payment of dues from the Centre as well as central aid and external borrowings, isn’t hard to imagine. CPM MP John Brittas estimates that the proposed law, if enacted in its current form, will inflate the collective expenditure of all states by “at least Rs 50,000 crore”, with his home state of Kerala alone having to bear an additional cost of Rs 2,500 crore each year to keep up just the current employment levels under MGNREGA.

Opposition parties believe that the Bill’s proposal to increase the minimum days of guaranteed wage employment a year from the 100 days currently prescribed under MGNREGA to 125 days under G-RAM-G is “nothing more than a cosmetic change” that will quickly be undone by the additional fiscal burden that the proposed law will put on states.

Centralisation raises red flags

The radical change in funding pattern isn’t the only area where the Centre seeks to push states into a corner. The proposed law also seeks to end the right of states to seek from the Centre their respective fund allocation for the next financial year based on their estimated annual work plan. The Bill replaces this mechanism with a “state-wise normative allocation for each financial year, based on objective parameters” prescribed by the Centre, while adding that “any expenditure incurred by a state in excess of its normative allocation shall be borne by the state government.”

In essence, the draft law centralises power with the Union government with regard to not just how much money it will allocate annually to each state for employment generation under G-RAM-G but also the power to decide where in any state work under the proposed law can be undertaken. That the Bill also empowers the Centre to decide the parameters for “normative allocation” could also become a cause of worry for Opposition-ruled states already crying foul over being given a step-motherly treatment, as the Centre could, at least hypothetically, choose those parameters that put such states at a disadvantage.

The Bill also introduces a problematic stop-work clause under the garb of making adequate agricultural labour available during “peak agricultural seasons”. If enacted, G-RAM-G will require all states and UTs to notify in advance a “period aggregating 60 days” in a year covering peak agricultural seasons, including sowing and harvesting, within their respective territories, during which period “no work shall be commenced or executed”.

The stop-work provision, Opposition parties and MNREGA activists say, will reduce the window of seeking work in a year for even those individuals who are not remotely involved with any agrarian activity. The states will essentially be allowed to roll out G-RAM-G works for 305 days or fewer in a year instead of doing so around the year under the existing MGNREGA.

Opposition cries federalism breach

Congress MP Saptagiri Ulaka, who heads the Parliamentary Standing Committee on rural development, said the proposed law “goes against almost every suggestion our committee has given over the years for strengthening the MGNREGA framework... it is actually a move to kill the scheme only because it was initiated by the Congress-led UPA government and has the name of Mahatma Gandhi attached to it”.

Also read | Renaming MGNREGA: Congress accuses BJP of 'hating' Mahatma Gandhi

CPM general-secretary MA Baby has dubbed the Bill a dismantling of “rights-based framework” under which MGNREGA operated and a bid to “punish Opposition-ruled states by cutting down allocations”. Congress’s communications in-charge Jairam Ramesh, who as the Union Rural Development Minister in the UPA-era had worked extensively on expanding the MGNREGA network, demanded that the Bill must be sent to the relevant parliamentary Standing Committee for detailed scrutiny.

In a letter to Union rural development minister Shivraj Singh Chouhan, who is scheduled to introduce the Bill in Lok Sabha, CPI’s Rajya Sabha MP V Sivadasan has called the proposed law a “blatant attack on rural livelihood”. Sivadasan has also claimed that by capping the Centre’s financial responsibility, shifting “unlimited financial risk” to the states and converting the states’ “statutory right into a budget contingent scheme”, the Centre was undermining cooperative federalism while systematically dismantling MGNREGA.