VB G-RAM G Act will hit Karnataka’s finances

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Concerns have been raised regarding the financial burden on the State due to the new rural employment Act which replaces the central funding model with a cost-sharing one.

Implications of the new rural employment Act for Karnataka

New Legislation: The Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) has been introduced, replacing the MGNREGA Act.
Funding Mechanism: Unlike the previous MGNREGA framework where the Centre funded the entire cost, the new Act mandates the State government to fund 40% of the project costs.
Financial Impact: Karnataka estimates an additional annual expenditure of ₹3,000 crore to ₹4,000 crore, resulting in a cumulative burden of approximately ₹20,000 crore over the next five years.
Fiscal Challenge: This increased expenditure comes at a critical time when the State is already staring at a revenue loss of about ₹18,000 crore annually due to the rationalization of GST rates.

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