The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has played a pivotal role in India's rural economy. The Act is often referred to as the 'Right to Work', as it establishes employment as a legal right for adults living in rural areas. In this article, we will discuss in detail the history of the Act, its importance, recent changes, and why it is called the 'Right to Work'. At the same time, we will think about ways to increase employment in rural and urban areas, which are relevant to India's economic challenges in the context of 2025.
Before we begin this discussion, it is important to note that in December 2025, the Indian government took a groundbreaking step. The long-standing MGNREGA or 100-day work scheme has been reformed and replaced by the 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' or 'VB-GRAM G' Act. The main objective of this new law is not only to provide daily wages to rural people, but also to increase their work skills and create a long-term livelihood or income path, which is linked to the dream of making India a developed nation by 2047. However, as this huge change has given rise to new hope among the common people, it has also created various questions and controversies. According to critics, there is a lot of uncertainty about how much the legal guarantees or right to work of the old system will be protected in this new mission and how the common people in the villages will adapt to complex technology, due to which this new policy has now become a major topic of discussion across the country.
Early 2000s: Challenges for the Rural Economy
In the early 2000s, the Indian economy was witnessing high GDP growth due to liberalisation and privatisation. The benefits of this development were clear in the cities, but rural India was lagging far behind. ‘Disguised unemployment’ was a major problem in agriculture—that is, people were employed on paper, but their productivity was negligible. The lack of non-farm employment in rural areas, crop losses due to bad weather, and migration to cities—all of these factors were putting pressure on the country’s economy and urban infrastructure. Rural-urban migration was increasing, putting an additional strain on urban infrastructure. In this context, the need to strengthen rural employment arose.
At that time, although India's overall economic development was remarkable, its benefits were not reaching everyone equally. In big cities, the development of factories and information technology was creating a lot of new job opportunities for educated youth, but the picture in rural Bengal was exactly the opposite. The majority of the people in the villages were dependent only on agriculture, but due to the lack of adequate irrigation facilities, good roads, or modern agricultural equipment, the income from it was not as expected. As a result, the poor people in the villages were getting poorer day by day and were trapped in an endless cycle of poverty. It was at this critical moment that a strong law was needed, which would not only depend on the mercy or compassion of the government, but would give a legal guarantee to every rural citizen to get a 'right to work' or get a job. Basically, steps like the old MGNREGA and the current improved 'VB-GRAM G' mission have been taken to eliminate this deficiency, so that the people of the village can hold their heads high and earn a living in exchange for their own labour.
2005: Birth of NREGA and the 'Right to Work'
In 2005, the UPA government led by Prime Minister Manmohan Singh introduced the 'National Rural Employment Guarantee Act' (NREGA). It was the first law in the world to establish employment as a legal right, and not as a gift or a subsidy. The basic idea of this law was simple: if a person is looking for work, ready to work hard, then the government has a duty to provide him with work. If the government fails, then unemployment benefits should be provided.
Why this system is considered a 'right to work' and what its features are is explained below in simple terms:
Article 41 of the Constitution of India states that the state shall, within its means, ensure the opportunity of employment to its citizens. This law was brought to fulfil this constitutional promise. The main reason for calling it a ‘right’ is that if the government fails to provide work, the applicant can claim unemployment benefits—meaning that getting work is no longer a mercy from the government, but a legal right of the citizen. To build a strong foundation for the rural economy, this law guarantees every family at least 100 days of work a year. A major feature of this work is that it is provided in people’s own area or within 5 kilometres of their homes, so that workers do not have to leave their villages to cities or other states in search of work (migration). In addition, there is a strict rule of paying wages directly into the bank account within 15 days to ensure the financial security of the workers. Not only that, through this project, all kinds of assets are created in the villages—such as digging ponds, building water retention dams, or building roads—that directly help in agricultural work and improve the overall quality of the village. The new VB-GRAM G mission of 2025 is also trying to make the workers more skilled based on this basic framework.
You can visit the MGNREGA portal website to know the government guidelines and current wage rates.
The role of the Panchayati Raj system in the implementation of this law is very important, but a large part of its financial support or wages comes directly from the central government funds. This system has brought about three major positive changes in the rural economy:
- First, it has become a major source of income for the unemployed people of the villages, which allows them to get work in times of need.
- Second, through this scheme, the emphasis in the village is more on social assets than on personal gains—such as building new roads or repairing ponds—which indirectly leads to the development of the entire village.
- Third and most importantly, it has increased the ‘bargaining power’ of the workers in the market. Earlier, the poor people of the villages were forced to work for the nominal wages paid by the contractors, because they had no alternative. But now, with a fixed wage guaranteed for government work, the contractors can no longer pay as little as they want. This works much like a minimum support price (MSP) for farmers; that is, if the workers do not get a fair wage in the market, they have a safe alternative to work on government projects.
The VB-GRAM G Mission, which is being launched in December 2025, is also trying to make the wage payment process more transparent by using this Panchayati Raj framework. For more detailed information on this, you can visit the website of the Ministry of Panchayati Raj, India.
2006-2008: Rollout of NREGA
In 2006, the scheme was started in 200 districts, and within just two years, in 2008, it was spread across the country. During this time, it became a lifeline for the rural economy. 5.5 crore families sought work annually, and 250-280 crore man-days of employment were created. The expenditure reached Rs 40-45 thousand crores annually. Participation of women is 50% and 40% for ST/SC, targeting marginalised communities.
It is worth noting that MGNREGA had already brought about a huge change in the rural economy before the VB-GRAM G mission was launched in December 2025. This law has significantly reduced ‘famine migration’ or food-related migration, especially in states like Rajasthan, Odisha, Chhattisgarh, and Jharkhand, where people were forced to leave their land and move to cities due to drought or lack of work. People have been less likely to leave their families as they find work in their own villages. As a result, not only have wage rates increased in the rural labour market, but private sector owners or landlords are no longer able to employ workers at low wages, as workers now have an alternative right to government jobs. The new mission of 2025 plans to build on this success story. You can visit the official portal of the Ministry of Rural Development of India to know the current status of such government schemes.
The Global Financial Crisis of 2008 and the Role of MGNREGA
The role of MGNREGA was very important during the global financial crisis of 2008. When the global financial crisis hit, many people lost their jobs in Indian cities, and the demand for shopping decreased. At that critical moment, the MGNREGA law acted as a 'shock absorber' or protective shield for the economy.
Simply put, this law provided work and cash to a large number of people in rural India. Many people who lost their jobs in the cities returned to the villages and found work under this scheme. As a result, the villagers were able to continue buying essential goods, which prevented the country's overall economic demand from collapsing completely. The government was able to minimise the impact of the recession to a large extent by maintaining the purchasing power of the rural people. This is why economists see MGNREGA as a successful model for maintaining the foundation of the economy during the crisis.
It is worth noting that in December 2025, the new 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' or VB-GRAM G was launched to replace MGNREGA, with the aim of building on this success and further strengthening rural employment.
2009: Gandhi's name added to MGNREGA
In 2009, the Act was renamed as the 'Mahatma Gandhi National Rural Employment Guarantee Act' (MGNREGA). It is associated with Gandhi's philosophy of rural self-reliance. By 2010-11, it had reached its peak.
Problems and Benefits of MGNREGA (2010-2014)
The MGNREGA scheme, while a very strong concept, was not without its flaws. The major weaknesses of the scheme were long delays in receiving wages (sometimes up to 30 to 60 days), withdrawal of money in the name of ghost or fake workers, and corruption. In many cases, the quality of work was found to be very poor; in some cases, it was just a meaningless job of digging holes in the ground and filling them up later, which did not create any lasting wealth. The main reason for this was the lack of proper planning by the Gram Panchayats. However, it is important to remember that these were systemic or implementation errors, not the original plan. To close these loopholes, Aadhaar-based Payments (ABPS) and complete digitisation were started from 2012-13, which helped in reaching the money directly to the bank account of the worker. In addition, it is also mandatory to verify the transparency of work through a 'social audit' or social audit. Currently, efforts are being made to improve this transparency further through the new 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' mission launched in December 2025. If you want to check the current wage or work status, you can visit the official portal of MGNREGA or the government website related to Direct Benefit Transfer (DBT).
2014: Arrival and disappointment of the Modi government
When the Narendra Modi government came to power in 2014, MGNREGA was the only major source of income or 'lifeline' for the common people of rural India. The government did not risk shutting down the project, but it had expressed its dissatisfaction with its performance from the beginning. In a speech in Parliament in 2015, Prime Minister Modi called the project a ‘monument to the failure’ of the previous government and said that he would keep the project alive to show the world that the Congress government had been keeping people busy for 60 years, only digging holes. In fact, in the following years, the government did not completely stop the annual budget or funding of the project, but the increase in its allocation was kept quite controlled. Instead, the government emphasised the quality of the project’s work and transparency, which finally paved the way for a major legal transformation or ‘VB-GRAM G’ mission in December 2025. To learn more about this political and economic evolution of rural development, you can consult the official documents of the Ministry of Rural Development of India.
2020: Covid Crisis and the Revival of MGNREGA
At the height of the Covid-19 pandemic, when lakhs of migrant workers from cities were forced to return to their villages after losing their jobs, the MGNREGA scheme played a saviour role again. To meet the needs of rural employment in this unprecedented crisis, the Government of India invested a record amount of over Rs 1 lakh crore in the scheme. As a result, people returning to villages found work, and it was possible to prevent widespread poverty and malnutrition in the country.
From a political perspective, two main differences can be observed:
- UPA Model: UPA governments mainly emphasised providing ‘work-based assistance’ (i.e. wages only if work is done) like MGNREGA.
- Modi Model: The Modi government, in addition to its post-COVID work, has focused more on ‘populist schemes’ or Janmohini schemes, such as free rations (PM Garib Kalyan Anna Yojana) and direct cash transfers to bank accounts.
After the COVID situation somewhat normalised, as the demand for rural employment increased, the government claimed that it had made the scheme a real possibility. But the problem behind this arrangement was political: the scheme was started by the Congress (UPA), so they were getting all the credit for its success. On the other hand, the cost of the scheme was constantly increasing, and this ‘political legacy’ was not with the Modi government. Due to this political and economic tension, the old law was finally replaced in December 2025 with a completely new 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' or VB-GRAM G, which brought a new direction to the rural employment framework.
2025: Launch and changes of VB-GRAM G
A radical change took place in India's rural employment policy in December 2025. After a quick approval by Parliament, President Droupadi Murmu signed the 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' or VB-GRAM G Act, which replaced the old 100-day work scheme (MGNREGA). The new law increases the annual working day limit from 100 to 125 days, but adds a controversial 60-day 'seasonal pause'. The government claims that this is to ensure that large farmers do not face a shortage of workers during the growing season, but labour organisations say it will take away the bargaining power of the poor and make them dependent on large landowners.
The new system has significantly reduced the central government's financial burden. The states will now be responsible for creating jobs, providing unemployment benefits and meeting the costs of the projects. The cost of funding will now be shared 60:40 between the centre and the states, with any additional costs to be borne by the states. Critics fear that this could make many states reluctant to provide work in a financial way. The change has also sparked political controversy. Former finance minister P. Chidambaram has described it as the 'second assassination of Gandhi' and the opposition has accused it of trying to erase Gandhi's ideals and legacy. While the government has called it a major step towards building a 'developed India', some experts believe that it is actually a ploy by the Centre to reduce the financial burden, which could push rural workers into an uncertain future.
For more information on the guidelines of this new law and state-wise funding, visit the official website of India's Ministry of Rural Development (MoRD).
Why MGNREGA is Reffered to as Right to Work? Detailed analysis
The main reason why MGNREGA is called 'right to work' is that it is not a mercy or mercy of the government for the poor, but a legal obligation. This law gives practical form to the directive given to the state in Article 41 of the Indian Constitution to provide employment opportunities to citizens. Its biggest strength is the 'guarantee'; that is, if a rural family applies for work, the administration is obliged to provide it. If the government fails to provide work within 15 days of the application, the applicant has to be paid unemployment allowance as per the rules. This has removed the idea of public welfare from the dharna and turned it into a legal right of the people. Whoever has a valid 'job card' is the one who deserves this right. According to Congress leader Sonia Gandhi, this law made Mahatma Gandhi's 'Sarbodaya' philosophy or the dream of upliftment of the people at the bottom of society, a reality. It is worth noting that the new VB-GRAM G mission, launched in December 2025, also attempts to maintain this entitlement framework, although its implementation modalities are currently the subject of political and social debate.
Ways to increase employment in rural areas
To increase rural employment, lessons can be learned from the experience of MGNREGA. In 2025, VB-GRAM G guaranteed 125 days, but in reality, only 2% of households get a full day. Ways:
- Skill Development and Training: Upskilling rural youth through Rural Self-Employment Training Institutes (RSETIs) and Skill India Mission. For example, training in agriculture, handicrafts, and digital literacy. Employment-linked incentives in the 2025 budget are encouraging the private sector.
- Agriculture and Allied Sector Development: Making agriculture profitable through PM Krishi Sinchai Yojana, PM Fasal Bima Yojana, and Kisan Credit Card. Digital agriculture (like Fermont) is creating employment in the trends of 2025.
- Self-Employment and Entrepreneurship: Loans and support for rural entrepreneurs. A community-driven approach creates job creation in Fisi.
- Infrastructure Projects: Increase water conservation, road construction under VB-GRAM G.
- Digital Opportunities: Promote e-commerce, remote work in villages. By 2025, 7.85 million non-agri jobs will be needed.
These should be implemented by avoiding the problems (corruption, delay) of MGNREGA.
Means to increase employment in urban areas
For urban employment, there is no scheme like MGNREGA, but the budget and programs of 2025 are focusing on it. The target is to create 100 million jobs, which will increase urban migration. Ways:
- Green and Resilient Urban Development: According to a World Bank report, investment in housing, transport, and municipal services. India is creating jobs by developing infrastructure in the Future City Program 2025
- Skill Development: National Skill Development Mission, Pratham, Apprenticeship, and Internship. The Economic Survey of 2025 says that 7.85 million non-agricultural jobs are needed annually.
- Tourism and Service Sector: Tourism supports 75 million jobs. Democratizing premium experiences.
- Employment-Linked Incentives: Three schemes in Budget 2025 are encouraging the private sector. Flexible work, work-life balance promotion.
- Urban Employment Programmes: Programmes like IIHS are responding to urban unemployment. Linked to capital efficiency and the nuclear family.
Finally, MGNREGA was a strong pillar of India's rural economy as it made employment a 'legal right' of citizens rather than just a government subsidy. It helped strengthen rural India from within by increasing the purchasing power of rural people. 'The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin)' or VB-GRAM G, launched in December 2025, has added a new dimension to this system. Although there are several challenges and controversies regarding the implementation of this new mission, such as funding and protection of rights, its main objective is to make rural India more self-reliant.
Standing at this juncture of 2025, there is an urgent need to combine skills development of workers, improved infrastructure and the right policies to increase employment in both rural and urban areas of India. The successful implementation of the challenge that India has taken to create 100 million new jobs by 202,5 to become a developed nation by 2047 will be the key to the future prosperity of the country.
Follow the website of the Ministry of Rural Development to know more about the current status of rural employment and the new mission for 2025.
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