Mint Explainer: Why is the government looking to replace India’s rural job guarantee scheme?

On Thursday the Union government passed the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill 2025 in the Lok Sabha, proposing a sweeping overhaul of India’s two-decade-old rural job guarantee programme. It has now been sent to the Rajya Sabha for discussion.The new bill seeks to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 and the scheme named after it, MGNREGS, which has 260 million registered workers and covers 26,9000 gram panchayats across India.According to the government, the bill seeks to transform the nature of the scheme by bringing states in as partners, and resolve a longstanding problem in the rural job market—of MGNREGA jobs competing with regular ones when their wages are close to or higher than what local farmers or small contractors pay.Critics, however, say the bill significantly increases the financial and administrative burden on local governments as it passes on some of the wage costs – currently borne entirely by the Centre – to states.Mint takes a closer look at proposed changes, their implications, and the critisisms against them.In a statement on the new bill, the government said rural India has undergone a transformation over the past two decades.

It said the poverty rate fell sharply from 25.7% in FY12 to 4.86% in FY24, supported by rising incomes, consumption, and access to financial services.With stronger social protection, better connectivity, deeper digital access, and more diverse livelihoods in rural areas, the old framework no longer reflected today’s reality, it said.The biggest change the bill proposes concerns funding for the scheme. Under MGNREGA, the union government pays 100% of wage costs, which account for most of the