Centre May Save Rs 50,000 Crore as Viksit Bharat-Guarantee Scheme Slows Down

Going by the tardy progress in the first four months of the rollout of the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM-G), the Centre may save around Rs 50,000 crore, as mandatory cost-sharing by states and tighter norms to plug misuse have slowed its offtake, sources told FE. To curb rampant leakages, G RAM-G replaced the two-decade-old rural job guarantee programme, MGNREGS, from July this year, seeking a complete overhaul, with a shift in focus towards strategic infrastructure creation and a predetermined funding pattern, largely along the lines of the Finance Commission’s devolution formula. The scheme is no longer demand-driven, and the Centre shares its costs in a 60:40 ratio with the states, in line with other centrally sponsored schemes. For FY27, the Centre has earmarked Rs 95,692 crore for the G RAM-G scheme, while the total programme outlay, after factoring in the states’ share, is estimated at Rs 1.51 lakh crore. Actual Central releases stood at Rs 5,539 crore so far in FY27, government data showed. Actual expenditure, however, stood at Rs 14,323 crore. This indicates that the Centre has not fully approved the expenditure, possibly due to non-compliance with the scheme’s cost-sharing requirements and other parameters. Of the total expenditure so far, Rs 12,193 crore was spent on wages and Rs 983 crore went towards material costs. Assuming that the scheme gathers pace over the remaining five months of the year, the Centre’s spending under it is unlikely to exceed Rs 40,000 crore for the full year. The unintended savings of around Rs 50,000 crore could come in handy for the government in meeting additional fertiliser subsidy expenditure estimated at Rs 40,000-50,000 crore to insulate farmers, due to a spike in global prices, sources said. Tamil Nadu was the biggest user of the erstwhile MGNREGS, with annual spending of Rs 10,000-12,000 crore and its contribution limited to around Rs 1,000 crore. Hit hard by the changes, the state wrote to the Centre in July, saying it would face an additional annual financial burden of Rs 5,000 crore following the replacement of MGNREGS with G RAM-G. Under MGNREGS, the Centre bore the entire unskilled wage and administrative costs and 75% of material expenses, leaving the state to pay only 25% of material costs, apart from the nominal costs of skilled and semi-skilled labour, resulting in limited fiscal responsibility at the state level. Incidentally, Tamil Nadu was among the more prosperous states that cornered the highest share of the MGNREGS, amid allegations that the programme was used to fund state projects or that machines were deployed instead of labour for carrying out works. Despite multiple reform attempts, serious systemic failures persisted in MGNREGS. Investigations across 19 districts of West Bengal uncovered non-existent works and misuse of funds, leading to a freeze on payments in the state under the previous administration. Monitoring across 23 states in FY26 found that the works undertaken were not commensurate with expenditure, machines were used in labour-intensive projects, and digital attendance norms were widely bypassed. Despite moving away from an open-ended demand-driven model, the Centre has proposed increasing the statutory employment guarantee under G RAM-G from 100 to 125 days per rural household. The objective is to ensure income support during agricultural lean seasons while addressing unintended distortions caused by public works during peak farm activity.