The Union government has rejected states' request to lower their mandatory 40% financial contribution under the Viksit Bharat–Guarantee for Rozgar and Aajeevika Mission-Gramin, retaining the existing 60:40 cost-sharing formula for general states.
The Centre has earmarked ₹95,692.31 crore for the scheme in FY27 and has already released the first instalment of ₹25,844.97 crore to states and Union Territories.
The government said it has settled all admissible 2025-26 wage liabilities under the erstwhile MGNREGS and continues to process pending material cost claims based on documentation submitted by states.
No Relief for States; Centre Retains 60:40 Funding Formula for Rural Employment Scheme
The Centre has retained the existing 60:40 funding formula for the Viksit Bharat–Guarantee for Rozgar and Aajeevika Mission-Gramin, saying the cost-sharing model promotes accountability and state ownership
Summary
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The Union government has rejected requests to reduce the mandatory 40 per cent financial contribution from states for the Viksit Bharat–Guarantee for Rozgar and Aajeevika Mission-Gramin (VB-G RAM-G), the Ministry of Rural Development stated in a written reply to the Lok Sabha on August 4, 2026, as reported by Moneycontrol.
The existing cost-sharing mechanism will remain unchanged. The Centre will cover 60 per cent of expenses for general states. North-Eastern states, Himalayan states and specified Union Territories will continue with a 90:10 funding ratio.
The ministry provided this clarification in response to parliamentary queries. Lawmakers had raised questions regarding the financial constraints faced by states and asked if the government planned any funding relaxations.
Maintaining Existing Funding Ratios
The cost-sharing arrangement matches the standard structure of Centrally Sponsored Schemes.
The ministry stated this approach ensures better accountability, increases state ownership and supports the effective implementation of rural development programmes.
The Centre has earmarked Rs 95,692.31 crore as its share for the scheme during the financial year 2026-27.
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This cycle covers the period from July 1, 2026 to March 31, 2027. The ministry described this as among the largest-ever allocations for rural employment programmes at the Budget Estimate stage.
Initial financial sanctions worth Rs 25,844.97 crore have already been approved. The government has issued these funds to states and Union Territories as the first instalment.
Regional administrations have informed the central government that they have made the required budget provisions. This ensures they can meet their corresponding financial obligations under the programme.
Clearing Past Scheme Liabilities
Settling previous dues under the older Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) remains an ongoing exercise. The ministry informed that clearance depends on fund utilisation certificates, required paperwork and formal requests from state governments.
The Union government has disbursed Rs 9,711.98 crore in the current financial year. This release settles all admissible wage liabilities from 2025-26.
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Authorities have issued a financial sanction of Rs 7,765.68 crore to clear material costs. From this allocation, states and Union Territories have utilised Rs 5,842.96 crore.
The rural development ministry has directed regional governments to submit comprehensive details of any pending liabilities from previous years. This will allow the central administration to review eligible claims and release the necessary funds.