The repeal of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and its replacement with the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Act is not merely a policy shift in rural employment – it raises a serious and somewhat unexplored constitutional question about the financial autonomy of states and the limits of parliament’s power to impose obligations upon them. At the heart of this concern lies Section 22 of the new Act and its uneasy relationship with Article 258 of the constitution.Under the MGNREGA, rural employment was conceived as a right and a guarantee with the primary financial responsibility being cast on the Union. This design was quite a deliberate one – reflecting the understanding that a national employment guarantee, legislated by parliament, could not be meaningfully or effectively delivered unless States were insulated from unpredictable fiscal burdens arising from fluctuating demand.The VB-G RAM G Act radically alters this design. Section 22 operationalises a cost-sharing framework under which the Union government’s contribution is capped, reportedly at 60% for most states, with the remaining burden falling squarely on state governments. This is not merely a change in budgetary practice but a statutory mandate. The obligation on the state governments to finance a substantial portion of an employment guarantee programme is now imposed by a central law, not negotiated through executive arrangements or intergovernmental consensus.Also read: From Gandhi to VB-G RAM G: More than a Name Change, a Dismantling of the Right to WorkThis is where Article 258 of the constitution assumes significance. Article 258(2) allows parliament to confer powers and impose duties on states even in matters beyond their legislative competence. But Article 258(3) introduces an essential safeguard: where such powers or duties entail additional administrative costs, the Union is constitutionally obliged to compensate the states. The quantum of such compensation must be determined by agreement, or if an agreement could not be reached, by an arbitrator appointed by the chief justice of India. This provision embodies a core principle of cooperation in federal practice that the Union government cannot unilaterally place fiscal burdens onto states while exercising its legislative authority.Section 22 of the VB-G RAM G Act appears to do precisely that. By mandating state co-funding as an intrinsic feature of the statutory scheme, it imposes a continuing financial and administrative obligation on states. The Act however is conspicuously silent on compensation under Article 258(3). There is no mechanism for agreement, no recognition of “extra costs of administration”, and no fallback to arbitration. Instead, the financial burden is normalised as a matter of legislative policy, leaving states with little choice but to comply or curtail employment provision.This raises a fundamental constitutional question: can parliament, by statute, impose ongoing financial obligations on states in the execution of a centrally designed programme without triggering the compensatory framework of Article 258(3)? If the answer is yes, Article 258(3) risks becoming a dead letter. If the answer is no, Section 22 is on the face of it unconstitutional.The Andhra Pradesh high court’s capital-trifurcation judgment has a few interesting pointers in understanding the logic of Article 258. There, the court treated parliament’s stipulation of a single capital under the AP Reorganisation Act and the corresponding financial obligations on the Union, as a binding federal arrangement traceable to Article 258. Once parliament had structured powers, duties, and fiscal commitments through law, the state was held incapable of unilaterally altering that arrangement. Also read: As VB-G RAM G Bill is Railroaded Through Parliament, MGNREGA’s Historical Context is ForgottenWhile invalidating state laws for suffering from the vice of unilateralism, the decision reinforced the common-sense understanding that statutory schemes imposing or allocating financial responsibilities on states or vice-versa engage Article 258’s federal discipline. In the VB-G RAM G context, it strengthens the argument that parliament cannot, by ordinary legislation, shift enduring financial burdens onto the states without respecting the states’ consent and fiscal interests that find a voice in Article 258(3).The constitution carefully calibrates federal legislative power with financial responsibility and Article 258 is a key device through which that balance is preserved. If parliament can simply legislate cost-sharing obligations onto states without agreement or compensation, it would make the entire elaborate federal constitutional edifice and architecture of vertical power distribution between the Union and states virtually meaningless and otiose.Even if VB-G RAM G Act withstands judicial scrutiny on other grounds relating to how it seeks to implement the employment guarantee, Section 22 invites a deeper examination of how far the Union can go in converting states into paying agents for centrally mandated policies. That question perhaps goes beyond rural employment and threatens a radical reinterpretation of the Indian federal design.Prasanna S. is an advocate-on-record in the Supreme Court