VB-G RAM G Dominates Rural Development Budget with 40% Share
According to a comprehensive analysis by PRS Legislative Research, the newly introduced VB-G RAM G scheme, which is poised to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), has secured the largest portion of this year's budget for the Department of Rural Development. The scheme accounts for approximately 40 percent of the department's total allocation, highlighting a significant shift in government priorities toward rural welfare initiatives.
Budget Allocation Breakdown Across Key Schemes
The PRS analysis reveals that VB-G RAM G has been allocated a substantial Rs 95,692 crore in the budget, constituting around 40 percent of the Department of Rural Development's overall outlay. Following this, the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) accounts for 23 percent of the department's budget. Other schemes include MGNREGS at 12 percent, the National Rural Livelihood Mission (NRLM) at 8 percent, the Pradhan Mantri Gram Sadak Yojana (PMGSY) at 8 percent, and the National Social Assistance Programme (NSAP) at 4 percent, as reported by news agency PTI.
In the fiscal year 2026–27, VB-G RAM G (40 percent) and PMAY-G (23 percent) together represent 63 percent of the ministry's total gross expenditure. This is followed by MGNREGS (12 percent), NRLM (8 percent), PMGSY (8 percent), and NSAP (4 percent), according to the report.
Ministry and Department Allocations Show Incremental Growth
The Ministry of Rural Development has been allocated Rs 1,97,023 crore for 2026–27, marking a 4 percent increase compared to the revised estimates for 2025–26. Within this, the Department of Rural Development receives Rs 1,94,369 crore, also reflecting a 4 percent rise over the previous year's revised estimates. Notably, the Department of Land Resources has been allocated Rs 2,654 crore, which represents a sharp 51 percent increase over last year's revised estimates.
Sharp Reduction in MGNREGS Allocation
The allocation for MGNREGS this year stands at Rs 30,000 crore, which is 66 percent lower than the revised estimate of Rs 88,000 crore from the previous year, as per PTI. This significant cut contrasts with increased funding for other schemes. For instance, PMAY-G has been allocated Rs 54,917 crore, reflecting a 66 percent increase over the previous fiscal year's revised estimate. Similarly, PMGSY has received Rs 19,000 crore, a 73 percent rise compared to last year's revised estimate.
Fund-Sharing Pattern and Fiscal Implications Under VB-G RAM G
The report notes that under MGNREGS, wage payments accounted for approximately 70 percent of total expenditure over the last five years. Material costs made up about 26 percent of expenditure, with the Centre bearing roughly 20 percent of these costs. Overall, the Centre covered around 90 percent of the total expenditure under the scheme.
"With the change in fund sharing pattern under the VB-G RAM G Act, the expenditure by state governments on the scheme may increase," the report stated. Under the VB-G RAM G Act, which guarantees 125 days of work, the Centre and states will share expenditure in a 60:40 ratio. For northeastern and Himalayan states, the ratio will be 90:10, as per PTI.
Employment Trends and Wage Disparities Under MGNREGS
The analysis indicates that over the past decade, employment under MGNREGS averaged around 48 days per household per year. Less than 10 percent of participating households completed 100 days of work. In 2020–21, average days of employment increased to 52 days per household due to the Covid-19 pandemic, but moderated thereafter to 50 days per household in 2024–25, reported PTI.
On average, seven crore households demanded work during 2017–25, with six crore households, or about 90 percent, able to avail employment. The report also highlighted that actual wages paid to workers have often been lower than the notified rates. In 2025–26 (as of December 2025), wages received by workers were below the notified wage rate in 20 out of 31 states and Union Territories.
- In Andhra Pradesh, workers received Rs 268 against a notified Rs 307.
- In Chhattisgarh, workers were paid Rs 245 compared to Rs 261.
- In Gujarat, Rs 264 against Rs 288.
- In Karnataka, workers received Rs 342 compared to the notified Rs 370.
- The gap was wider in Rajasthan (Rs 221 versus Rs 281) and Tamil Nadu (Rs 268 versus Rs 336).
- In Telangana, workers received Rs 259 against a notified Rs 307.
PMAY-G Progress and Ongoing Challenges
Under rural housing, PMAY-G has been allocated Rs 54,917 crore, a 69 percent increase, according to the report. However, only around 70 percent of the targeted houses across phases have been completed so far. Delays have been attributed to various issues, including land availability, migration, Covid-related disruptions, and beneficiary-level constraints.
