On December 19, 2025, the Bharatiya Janata Party (BJP) government repealed India’s landmark employment-guarantee legislation, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), using its legislative majority in Parliament despite widespread protests. This moment stands in stark contrast to events two decades earlier, when BJP leaders – then in Opposition and colleagues of those in power today – had joined the United Progressive Alliance government, built a rare parliamentary consensus and enacted MGNREGA, recognising citizens’ right to work.After coming to power, the BJP government has steadily undermined the work guarantee by weakening its demand-driven character and starving the programme of resources, with the exception of the COVID-19 pandemic period. In a speech in Parliament in 2015, the prime minister said he would nurture MGNREGA as a “monument to failure” – a formulation that captured the government’s approach to the programme.While MGNREGA remained in force, the government’s intentions could be most clearly gauged in two ways: first, in the financial allocations it made to meet the work guarantee mandated by law; and second, in its response to any increase in demand for work through additional resources.But now, with the repeal of MGNREGA, the Union government has replaced these obligations with a new financial arrangement under the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, or VB-G RAM G, that is constitutionally and practically untenable. In the name of an employment guarantee, it offers an illusory assurance of enhanced work – up to 125 days – without the legal and fiscal foundations that underpinned the right to work since two decades.This time, however, the task of persuasion is far more difficult, because the repeal of MGNREGA entails the withdrawal of a concrete set of enforceable rights. Assertions of enhanced employment guarantees under VB-G RAM G have met with resistance, and protests against the repeal of MGNREGA are already emerging across the country. The forthcoming Union Budget will therefore be a critical test of how the BJP government seeks to reconcile the promise of more guaranteed workdays with the lived reality of growing precarity and distress.Also read: The Modi Government’s Narrative Building on Jobs Is Just Not SucceedingPut simply, there can be no guarantee under VB-G RAM G unless it rests on a strong, enforceable legal right to employment, backed by adequate public funding. Budget 2025-26, in this sense, will mark a turning point: while the finance minister will present budgetary allocations for the new system, the Union government will simultaneously use its sweeping powers under the new law to determine where VB-G RAM G will operate, in what form and to what extent.There are four key issues that need to be examined in Budget 2025–26:a) the areas that will be notified for the operation of VB-G RAM G;b) the normative allocation made to each state;c) the implications of the VB-G RAM G financing framework for state budgets; andd) the projected shortfall that states may be required to meet from their own resources, arising from an open-ended obligation that cannot be constrained by the budget.At this point, it is necessary to note that VB-G RAM G raises serious concerns under Article 258 of the Constitution of India, which requires the Union government to obtain the consent of states when a central law imposes expenditure obligations on them. This has not been done in the case of VB-G RAM G. Opposition-ruled states have already indicated their intention to challenge the financing structure of VB-G RAM G in the Supreme Court. If the court were to uphold this arrangement, it would have far-reaching implications for the autonomy of states to plan and finance their own development priorities.For the present, however, the law must be examined on its own terms. Section 5(1) is particularly significant, as it empowers the Union government to notify the areas in which the 125-day employment guarantee will apply. Under this provision, the universal employment guarantee that existed under MGNREGA is replaced by a conditional and territorially limited entitlement. The “on/off” nature of this notification power effectively eliminates any secure right to work, since an area notified in one period may be excluded in the future. VB-G RAM G, in effect, can be switched on and off, rather than operating as a continuous guarantee.Farmers protest in Amritsar against the Union government’s farm policies and repeal of MGNREGA on January 16, 2026. Photo: Shiva Sharma/PTILet us assume that, at least in the first year, all of rural India is notified under VB-G RAM G. Even under this most generous assumption, the claim of enhancing guaranteed employment to 125 days is exposed as illusory. Average employment for active MGNREGA workers never exceeded 60 days and stood at just over 50 days in 2024-25. This shortfall was not due to a lack of demand for work. On the ground, workers have repeatedly struggled to register demand, even as the central government has relied on unofficial expenditure “caps” to suppress demand and reduce spending.A simple calculation illustrates the scale of the gap. Providing 125 days of work to roughly 9 crore active job card households, at an average cost of Rs 356 per day (at 2024 prices), would require a budgetary allocation of approximately Rs 4 lakh crore – around 1 to 1.2% of GDP. Right-to-work advocates have long estimated that even a properly funded 100-day guarantee would require public spending of about 1% of GDP.This requirement stands in stark contrast to the roughly Rs 1.51 lakh crore that the government has indicated as the combined contribution of the Union and the states under VB-G RAM G. Even if allocations at both levels match the figures set out in the financial memorandum of the law, overall employment is likely to decline while state expenditure will sharply rise. This is because under VB-G RAM G, employment is no longer driven by demand but by budget ceilings, making a reduction in actual workdays almost inevitable.Moreover, the assumption here is that the states are able to mobilise the mandated 40% share. If they cannot, the Union government can retain its 60% allocation while attributing the resulting collapse in employment to state-level failure! It is this Catch-22 for states that the financing framework of VB-G RAM G is designed to create.Also read: Why the Dismantling of MGNREGA Disproportionately Impacts Rural WomenThe new law also introduces an unprecedented 60-day blackout period during which work cannot be provided. Under MGNREGA, the wage rate and work guarantee functioned as a de facto minimum support price for labour, strengthening workers’ bargaining power in local labour markets. By weakening the work guarantee and imposing a blackout period, VB-G RAM G significantly erodes this protection, reducing workers’ ability to negotiate wages and conditions. Its consequences, therefore, extend well beyond the quantum of employment generated under the programme and hurt labour markets in general.The law further concentrates financial control in the hands of the Union government. Section 4(5) provides that “the central government shall, for each financial year, determine the state-wise normative allocation for the implementation of the scheme”. In addition, under Section 22(2), all states other than the north-eastern and hill states are required to contribute 40% of the normative allocation determined by the Union for their respective states.Taken together, these provisions enable the Union government to arrogate to itself the power to decide how much funding each state will receive to discharge its obligation to provide up to 125 days of guaranteed employment in areas notified by the Union. Yet, under Section 4(6), states are simultaneously required to meet any additional expenditure necessary to fulfil the employment guarantee. The result is an open-ended financial liability for states, determined by Union-controlled allocations over which they have no effective control.And that is not all. The most extreme feature of the new arrangement is that individuals in notified areas retain the legal right to demand up to 125 days of work even after the allocated funds have been exhausted. This creates an open-ended and indeterminate financial liability for states in areas notified by the Union government, with no corresponding assurance of additional central support.Taken together, these provisions constitute an unprecedented and impractical financing framework that undermines the very idea of an employment guarantee. It is through these mechanisms that the legal and financial jumla of a 125-day employment guarantee under VB-G RAM G stands exposed.The BJP has long relied on its unmatched ability to shape political narratives. This time, however, the claims surrounding VB-G RAM G are already being contested by workers, panchayat representatives, citizens’ groups and opposition parties across the country. As the implications of the new financing and notification framework become clearer, the gap between promise and reality is likely to widen. Perhaps those most affected will become vocal and make it clear that their rights cannot be abrogated by propaganda, illusions or dreams.The Union Budget to be presented on Sunday, February 1, will be the first concrete test of whether the government is willing – or able – to back its claims of a 125-day employment guarantee with the legal and financial commitments such a promise requires.Nikhil Dey and Aruna Roy are social activists and founder members of the Mazdoor Kisan Shakti Sangathan (MKSS).