VG-RAM-G: 60:40 cost sharing method to impose additional financial burden on Telangana

The Centre’s decision to revise the MGNREGA cost-sharing ratio to 60:40 under the revamped VB–G RAM G scheme is expected to impose an additional Rs. 1,600 crore burden on Telangana, worsening the financial stress faced by panchayats.

Hyderabad: The Central government’s decision to increase the share of expenditure for works executed under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to a 60:40 ratio between the State and the Centre will impose an additional financial burden on Telangana.

Apart from changing the MGNREGA name to Viksit Bharat – Guarantee for Rozgar and Ajveeka Mission (Gramin) (VB–G RAM G), the Central government has increased the cost-sharing ratio between the State and the Centre to 60:40 from the existing 90:10.

---

Under the new policy, the number of work days for rural households is being increased from 100 to 120 days in a financial year. However, the revised fund-sharing pattern will definitely have an impact on the Panchayat Raj department, which is already reeling under a severe financial crisis.

Due to the delay in holding Gram Panchayat elections, the State government is worried about the lapse of nearly Rs.3,000 crore in Central government grants. This apart, due to paucity of funds, panchayats were not being extended the required financial assistance to execute various works in villages.

Since the Congress government came to power, Panchayat Secretaries have been forced to spend from their own pockets to execute basic works such as spraying bleaching powder, purchasing brooms and ensuring sanitation. In many villages, bearing the expenditure towards diesel costs for operating water tankers to supply water and for watering saplings has also become a challenge.

Under the MGNREGA, panchayats used to execute various works, including laying roads and construction of public toilets and school buildings. Accordingly, the Central government used to bear the full cost of workers’ wages, three-fourths of the material cost and three-fourths of the wages for skilled and semi-skilled workers.

The implementation of the new policy would impose an additional financial burden of about Rs.1,600 crore on the State. If the number of work days is increased, the expenditure would rise further as the State government would have to bear 40 percent of the total cost, said an office bearer of the Panchayat Secretaries Association.

In Telangana, there are 1.06 crore workers and 51.96 lakh job cards have been issued. In 2021-22, Telangana was approved 14.25 crore work days (person days), which has been cut down to 7.5 crore work days in 2025-26.

In the 2024-25 financial year, the State was approved 12 crore work days and, accordingly, the Central government allocated Rs.3,834 crore. After adding the State government’s share, the total budget was about Rs.4,344 crore.

Of this, the Central government bore Rs.2,612 crore towards workers’ wages, an administrative cost of Rs.1,500 crore and other expenses. The Telangana government’s share supported the material cost component, which was minimal, while the balance was supported by the Central government.

Under the new policy, the State government’s burden would increase drastically as it would have to bear 40 percent of the total annual expenditure. Things would be even more challenging than they were during the last two years, the office bearer added.