Congress slams VB G RAM G funding formula, calls it an assault on federalism

The Congress criticised the Centre's expenditure-sharing formula under the VB G RAM G Act, alleging it weakens federalism and burdens states financially. The party said replacing MGNREGA with the new scheme centralises decision-making while undermining states' fiscal autonomy

New Delhi: The Congress on Monday hit out at the government over the VB G RAM G expenditure formula that the Centre and states are to follow, saying that ensuring equity through an efficiency formula is yet another “assault” on the “already-fragile” fabric of India’s federalism.

Congress general secretary in charge of communications, Jairam Ramesh, pointed out that MGNREGA was a demand-driven rights-based guarantee by the Central government.

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“VB G RAM G will be an allocation-based scheme in which 60 per cent of the expenditure will be borne by the Centre if 40 per cent will come from the states. The normative allocation formula that is being adopted is the same that the 16th Finance Commission had adopted to distribute the single divisible pool of taxes among states,” Ramesh said on X.

The Finance Commission formula is for distributing revenues, not underwriting expenditures, he said. “That is the role of grants, most of which were abolished by the 16th Finance Commission. Ensuring equity through an efficiency formula is yet another assault on the already fragile fabric of our federalism,” Ramesh said.

Claiming that several states have raised concerns over the MGNREGA-substitute VB G RAM G Act, the Congress on Sunday said the new law would guarantee only centralisation and further financial stress on the states.

Ramesh had said that the Modi government, “vengeful and petty” as ever, bulldozed the repeal of MGNREGA through Parliament without any thorough consultation with the Parliamentary Standing Committee on Rural Development, state governments, or the other relevant stakeholders. The Congress leader had also shared a chart on X that listed the “Modi government’s four attacks on your right to work”. It alleged that through the VB G RAM G Act, the government is “attacking” the right to work, right to fair wages, Panchayati Raj and state finances.

The Congress alleged that the only guarantee the law offers is that of “extreme centralisation” and “weakening of the bargaining power of rural labour”. The Centre has announced that the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, or the VB G RAM G Act, will come into force across the country from July 1, replacing the two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The new Act will have a fresh framework that promises 125 days of statutory wage employment to rural households.