PERHAPS the most consequential legislation in post-independence India was passed by Parliament on August 23, 2005 and came into force on February 2, 2006. It was the National Rural Employment Guarantee Act, later to be renamed Mahatma Gandhi National Rural Employment Guarantee Act that was enacted by the UPA-I government under Left pressure (since the government depended on Left support). It differed from all similar legislation in the past, such as the Food-for-Work programme, in one crucial respect: it made the provision of employment by the government mandatory in rural India whenever there was demand for it, failing which a compensation had to be paid to the job-applicants. It conferred in short a right to employment.

True, only one member of the household could ask for employment and that too for a maximum of 100 days per year, but even this limited right meant a fundamental departure. The Indian Constitution had not provided any economic rights to the citizens on a par with the civil and political rights it had guaranteed, and the MGNREGA entailed a partial rectification of this lacuna. Not only did it boost rural incomes, but, precisely because the provision of employment was not left to the discretion of the government, it conferred on the people a right to employment and hence the dignity of citizenship.

Not surprisingly, the MGNREG Scheme, as the programme came to be called, aroused the ire of all the vested interests. The custodians of the feudal order were incensed not only by the increased incomes of the rural poor, but also because many of the rural poor happen to be Dalits who escaped from a “beck-and-call” relationship. The custodians of the capitalist order were incensed by the fact that the diminution in the relative size of the labour reserves brought about by the MGNREGS increased the bargaining strength of the workers; they commandeered their “lapdog economists” to advance the argument that government expenditure on MGNREGS was simply money down the drain.

They got their chance to roll back the scheme when an arch-reactionary government got elected in 2014 and Narendra Modi became the Prime Minister. Since keeping the communal-fascist cauldron boiling was the top priority of the new government, it was immediately pre-occupied by that “task” and came to “tackle” the MGNREGS a little late; but it eventually did for sure. It brought in legislation in 2025, which provided that, from July 1, 2026, a new programme would replace the MGNREGS whose primary characteristic would be that it was not a rights-based programme. It pretended that instead of the 100 days of employment that the MGNREGS had provided, the new programme VBGRAMG would provide up to 125 days of employment. The new programme was thus touted as providing larger employment than the earlier one, but it was not a demand-driven programme.

Earlier, up to 100 days of employment had to be provided wherever and whenever people demanded work; now up to 125 days of employment could be provided wherever and whenever the central government chose to provide such employment. This meant that employment did not have to be provided in areas where people were grossly unemployed and in dire need of work; it would be provided only where the central government was implementing some project that needed labour.

While taking away a right conferred on the people, the central government also, completely unilaterally, decided to change the pattern of financing of the new employment programme. Earlier the central government bore the entire burden of the wage-bill under MGNREGS; the state governments would meet only a part, 25 percent, of the  material costs bill, so that the division of spending between the Centre and the states came roughly to 90: 10. Now, under VBGRAMG, the division became 60: 40, and this change was effected without a single word of consultation with the state governments. It is well-known that in India the finances of the state governments are more stretched than those of the central government (otherwise there would be no need for a Finance Commission every five years to decide on the devolution of resources from the Centre to the states). By simply off-loading a substantial part of the expenditure on rural employment to the state governments, the VBGRAMG Act effectively provided for a reduction in the scale of the programme; and what is more, for such a reduction the state governments could then be conveniently blamed.

Looking at the matter another way, employment henceforth would be provided not necessarily where the people were in dire need of it; it would be provided where the Centre chose to provide it, that is on central government projects, and since the state governments were expected to bear 40 percent of the costs of the project, the Centre was in effect getting the state governments now to bear the financial burden of some of its own projects. Thus, the VBGRAMG scheme was a central government conspiracy to take away a right from the people, to wind down the overall employment spending, and to offload the burden of financing some of its own projects on to the shoulders of state governments. The central government of course strenuously denied that the employment programme was being reduced in scale, though it was obvious to everyone that it was. In fact an immediate reason for taking away employment as a right was precisely to curtail the scope and coverage of the programme.

We now have the figures for employment generated for the first month after the introduction of VBGRAMG, that is, for July 2026. There has been as much as a 50 percent drop between the employment generated in July 2025 and July 2026; the drop is from 153.3 million person-days in July 2025 to 76.7 million person-days in July 2026. Between these two dates the number of households accessing work fell by even more, by 51.45 percent to 6.894 million in July 2026.

Since we are comparing July with July, no amount of sophistry on the part of the government can possibly explain this drop, other than the simple fact that the programme is being wound down in large numbers of districts in the country. Explanations like the demand for employment being lower this year for some special reasons simply would not stand scrutiny. The substitution of the MGNREGS by VBGRAMG has not only taken away a right from the people; it has simply resulted in a massive winding down of employment generation. At a time when unemployment has become rampant, when anger over educated unemployment has boiled over to mass protests as in Jantar Mantar, even the provision of unskilled employment in rural India has been under an extraordinarily severe attack.

Such however is the economic logic of neo-liberalism that even this acute social crisis becomes an occasion for making large transfers to crony capitalists. The argument is advanced that to alleviate unemployment there has to be larger investment for setting up factories and such like, for which the capitalists have got to be incentivised through all sorts of transfers. In the process, government resources are frittered away through such transfers to capitalists, and measures for directly increasing employment in the economy, such as through filling up vacant government posts, especially of school and college teachers, are shunned on the grounds that there are no resources with the government! This charade has been going on for quite some time, accentuating the overall problem of unemployment.

Approximately 1.1 million unfilled teaching posts exist today in government and government-aided schools across India. The filling up of these posts (for which of course the cash-strapped state governments have to be financially aided by the Centre) would not only immediately create a million jobs, but several times more when the multiplier effects of such expenditure are taken into account. Filling up such posts on the one hand and extending, not curtailing, the rights-based employment programme on the other, through for instance extending its coverage from rural to urban India, from 100 days per annum to throughout the year, and from one member per family to whoever demands work, are the obvious solution to the intense crisis of unemployment facing the country.

The question would be immediately raised: where are the resources for it? Such resources can be found precisely by reversing the absurd policy of making transfers to capitalists and instead by imposing on them, and on the rich in general, a combination of a wealth tax and an inheritance tax. To be sure, the arch-reactionary NDA government cannot be expected to do this; but those who seriously wish to overcome unemployment need above all to shake off the hegemony of neo-liberal ideas.