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.
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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.
Constitutional Perspective:
- Article 41 (Directive Principles of State Policy): Directs the State to make effective provisions for securing the Right to Work, public assistance and livelihood opportunities within its economic capacity, providing the constitutional foundation for rural employment programmes.
- Article 38: Mandates the State to promote social, economic and political justice while reducing inequalities in income, status and opportunities through inclusive development.
- Article 39(a): Directs the State to ensure that citizens have adequate means of livelihood, reinforcing the objective of employment guarantee programmes.
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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.
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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.
2 Jul 2026
