VB-G RAM G Emerges as Largest Rural Development Allocation in Budget 2026-27

New Delhi, February 15: The newly introduced VB-G RAM G scheme, set to replace the Mahatma Gandhi National Rural Employment Guarantee Scheme, has secured the largest share of the Budget allocation for the Department of Rural Development in 2026-27, accounting for nearly 40 percent of the department’s total outlay.

According to an analysis of the Union Budget by PRS Legislative Research, VB-G RAM G has been allocated Rs 95,692 crore, making it the single biggest component of the rural development budget this year.

Rural Development Budget 2026-27: Key Allocations​

The Ministry of Rural Development has been allocated Rs 1,97,023 crore for 2026-27, marking a 4 percent increase over the revised estimates of 2025-26.

Within this, the Department of Rural Development has received Rs 1,94,369 crore, also 4 percent higher than last year’s revised estimates. The Department of Land Resources has seen a sharper rise, with an allocation of Rs 2,654 crore, reflecting a 51 percent increase over the revised estimates of 2025-26.

VB-G RAM G and Pradhan Mantri Awas Yojana-Gramin together account for 63 percent of the department’s total gross expenditure.

Scheme-wise Share in Department Budget​

• VB-G RAM G: 40 percent
• PMAY-G: 23 percent
• MGNREGS: 12 percent
• NRLM: 8 percent
• PMGSY: 8 percent
• National Social Assistance Programme: 4 percent

MGNREGS Allocation Sees Sharp Reduction​

The allocation for MGNREGS in 2026-27 stands at Rs 30,000 crore, which is 66 percent lower than the revised estimate of Rs 88,000 crore in the previous financial year.

In contrast, most other major schemes have received higher allocations compared to the previous fiscal year. PMAY-G has been allocated Rs 54,917 crore, reflecting a 66 percent increase. PMGSY has received Rs 19,000 crore, marking a 73 percent rise over last year’s revised estimate.

Funding Pattern Shift Under VB-G RAM G​

Under MGNREGS, wage payments have historically accounted for around 70 percent of total expenditure over the past five years. Material costs comprised about 26 percent of total expenditure, of which nearly 20 percent was borne by the Centre. Overall, the Centre has funded around 90 percent of the total expenditure under MGNREGS.

With the introduction of VB-G RAM G, the funding structure changes significantly. The new scheme guarantees 125 days of work and follows a 60:40 Centre-state cost-sharing ratio. For Northeast and Himalayan states, the ratio will be 90:10.

The revised funding pattern indicates that state governments may see a higher expenditure burden under the new framework.

Employment Trends Under MGNREGS​

Over the past decade, employment under MGNREGS has averaged around 48 days per household annually. Less than 10 percent of participating households have completed 100 days of work.

In 2020-21, average employment rose to 52 days per household due to the Covid-19 pandemic. In subsequent years, employment moderated, reaching 50 days per household in 2024-25.

Between 2017 and 2025, an average of seven crore households demanded work annually, with around six crore households, or 90 percent, able to avail employment.

Wage Gaps Persist Across States​

The report also highlighted discrepancies between notified wage rates and actual wages paid to workers.

In 2025-26, as of December 2025, wages paid were below notified rates in 20 out of 31 states and Union Territories.

For instance:

• Andhra Pradesh: Rs 268 paid versus Rs 307 notified
• Chhattisgarh: Rs 245 versus Rs 261
• Gujarat: Rs 264 versus Rs 288
• Karnataka: Rs 342 versus Rs 370
• Rajasthan: Rs 221 versus Rs 281
• Tamil Nadu: Rs 268 versus Rs 336
• Telangana: Rs 259 versus Rs 307

These gaps indicate continued concerns over wage implementation across several regions.

PMAY-G Allocation Rises Amid Completion Delays​

In rural housing, the Pradhan Mantri Awas Yojana-Gramin has been allocated Rs 54,917 crore, representing a 69 percent increase.

However, only around 70 percent of the targeted houses across different phases have been completed so far. Delays have been linked to land availability issues, migration, disruptions during the Covid-19 period, and beneficiary-level constraints.

As Budget 2026-27 reshapes rural development priorities, the expanded allocation for VB-G RAM G signals a structural shift in employment guarantee policy, alongside enhanced funding for rural housing and infrastructure.