VB-GRAM G Act 2025: ₹300 Daily Wage Floor, Features & Implications

Subject: GS 2: Polity & Governance

Context: The Union Government has notified a minimum daily wage of ₹300 under the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) [VB-GRAM G] Act, 2025, which came into force on 1 July 2026, replacing the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.

IAS coaching

Key Highlights of the Wage Notification

• National Wage Floor: The Centre has fixed a minimum daily wage of ₹300, ensuring that no State or Union Territory pays less than this amount under VB-GRAM G.
• Significant Hike for Low-Wage States: Twenty-one States and Union Territories with wages below ₹300 under MGNREGA have witnessed substantial wage increases to meet the new national floor.
• Highest Wage Rate: Haryana continues to have the highest notified wage at ₹409 per day, followed by Goa (₹406) and Kerala (₹401).

Major State-wise Changes

• Hindi-Belt States: Uttar Pradesh (+₹48), Bihar (+₹45), Madhya Pradesh (+₹39) and Rajasthan (+₹19) have witnessed some of the largest wage revisions.
• North-Eastern and Himalayan States: Arunachal Pradesh, Nagaland, Assam, Tripura, Sikkim, Jharkhand, Himachal Pradesh, Uttarakhand and West Bengal have also received wage increases exceeding 15%.
• Southern States: Telangana, Andhra Pradesh, Tamil Nadu and Karnataka, where wages were already above ₹300, have seen only marginal revisions.

Objectives of the New Wage Floor

• Improving Rural Livelihoods: A higher minimum wage seeks to enhance income security and strengthen the purchasing power of rural households.
• Reducing Regional Disparities: Establishing a common wage floor narrows interstate disparities in rural employment wages.
• Strengthening Rural Demand: Higher wages are expected to stimulate rural consumption, support local markets and contribute to inclusive economic growth.
• Ensuring Uniform Social Protection: A national wage floor provides a minimum level of wage protection irrespective of the State of employment.

Concerns Raised over VB-GRAM G

• Shift from Rights-Based to Government-Driven Framework: Critics argue that VB-GRAM G moves away from the rights-based, demand-driven approach of MGNREGA towards a more government-controlled employment framework.
• Burden on States: Under the new funding mechanism, the combined expenditure on labour and material is subject to the 60:40 ratio, potentially increasing the financial burden on State Governments.
• Wages Still Considered Inadequate: Several stakeholders argue that the notified ₹300 daily wage remains below the level required to ensure a living wage, particularly amid rising inflation.
• Implementation Challenges: Since rural employment is implemented primarily through State Governments and Panchayati Raj Institutions, effective implementation will require greater Centre-State coordination, timely fund releases and collaborative decision-making.

Recommendations for Higher Wages

• Anoop Satpathy Committee (2019): The Expert Committee recommended a national minimum wage floor of ₹375 per day, based on scientific estimates of household consumption and living costs.
• Parliamentary Standing Committee: The Parliamentary Standing Committee on Rural Development has repeatedly recommended periodic enhancement of rural employment wages.

Its Potential Implications

• Positive Impact on Rural Economy: Higher wages can strengthen rural purchasing power, reduce distress migration and support local economic activity.
• Fiscal Implications: Increased wage expenditure may raise the overall fiscal commitment of both the Union and State Governments.
• Federal Concerns: Changes in the cost-sharing mechanism may generate fiscal stress for States with high demand for rural employment.
• Convergence with Rural Development Schemes: The Mission-based framework provides opportunities to integrate rural employment with schemes such as Pradhan Mantri Awaas Yojana-Gramin (PMAY-G), Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), Pradhan Mantri Gram Sadak Yojana (PMGSY), Jal Jeevan Mission (JJM) and National Rural Livelihoods Mission (NRLM) to create durable assets, improve skills and enhance sustainable livelihoods.
• Livelihood Diversification: Linking wage employment with skill development, asset creation and self-employment opportunities can facilitate the transition from short-term wage support to long-term rural economic resilience.

Click to Know UPSC OnlyIAS Coaching Centres

Way Forward

• Ensure Timely Wage Revision: Periodically revise wage rates by linking them to inflation, Consumer Price Index-Rural (CPI-R) and changes in the cost of living.
• Strengthen Fiscal Support: Provide adequate financial assistance to States to ensure uninterrupted implementation without compromising employment generation.
• Protect the Rights-Based Nature of Rural Employment: Ensure that employment guarantees remain demand-driven, transparent and accessible to all eligible rural households.
• Improve Wage Payments: Strengthen digital payment systems to ensure timely, direct and transparent wage disbursal.
• Enhance Social Security: Integrate rural employment programmes with skill development, livelihood diversification and social protection schemes for sustainable rural development.

Conclusion

The notification of a ₹300 daily wage floor under VB-GRAM G represents an important step towards improving rural wages. However, its long-term success will depend on adequate funding, timely implementation, cooperative federalism and preserving the objective of providing livelihood security to rural households.

Check Out UPSC CSE Books

Visit PW Store