New Delhi: India's Economic Survey has highlighted a significant transformation in the rural economy, marked by robust macroeconomic fundamentals and a decreasing reliance on the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) as a primary livelihood source. The survey presents compelling data indicating a sharp decline in persondays generated under the scheme, dropping from a pandemic-induced peak of 389 crore in the financial year 2021 to an estimated 184 crore by December 31, 2025, in the financial year 2026. This represents a substantial reduction of over 53%, signaling a shift in rural employment patterns.
Decline in MGNREGS Demand Amid Economic Recovery
The survey underscores that this decline in MGNREGS demand has occurred alongside a notable decrease in rural unemployment rates. Specifically, rural unemployment fell from 3.3% in 2020-21 to 2.5% in 2023-24, suggesting that many rural households are increasingly accessing non-farm employment opportunities or other work avenues beyond MGNREGS. This trend points to a broader economic recovery and diversification in rural livelihoods, reducing dependency on government-backed employment guarantees.
Structural Limitations of MGNREGA 2005
While the MGNREGA 2005 has long served as a critical safety net for rural households, with improved delivery systems over the years, the survey notes that its overall architecture has reached its limits. It emphasizes that evolving rural realities necessitate a reassessment of the scheme. Despite achievements such as a rise in women's participation from 48% in FY14 to 58.1% in FY25, deeper structural issues have persisted. These include misappropriation that accumulated over time and a low proportion of households completing the full 100 days of employment post-pandemic, highlighting inefficiencies that required addressing.
Viksit Bharat Act: A Legislative Reset for Rural Employment
In response to these challenges, the enactment of the Viksit Bharat- Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, is cited as a comprehensive statutory overhaul of MGNREGS. Described as a legislative reset, this act aims to modernize rural employment guarantees and strengthen accountability mechanisms. The survey highlights that the VB-G RAM G Act represents a significant upgrade over MGNREGA, effectively fixing structural weaknesses while enhancing employment opportunities in rural areas.
Implications for Rural Development
The findings from the Economic Survey suggest a positive trajectory for India's rural economy, with reduced dependence on MGNREGS indicating improved economic conditions and job availability. The introduction of the Viksit Bharat Act is poised to build on this progress by addressing past shortcomings and fostering a more resilient and accountable rural employment framework. As rural households increasingly engage in non-farm work, this shift could lead to sustainable growth and poverty alleviation in the long term.
