Hyderabad: New Gram Rozgar Bill may weaken welfare in poorer states, warns Abhijit Banerjee

HYDERABAD: Nobel Laureate and economist Abhijit Banerjee on Monday expressed concern over the proposed G Ram G Bill, warning that a declining share of federal funding could disproportionately affect poorer states.He said such a move could further weaken welfare in states that are already economically vulnerable.Speaking on the final day of the HLF, Banerjee highlighted the significant inequality in access to MNREGA jobs across states, noting that this undermines the programme’s role as a critical social safety net.“There is a lot of inequality in who gets MNREGA work. That already weakens its ability to function as a safety provider. There are states which are already poor. If the government cuts federal funding or does not adequately support those implementing the scheme on the ground, it will have a serious impact even in those who execute it on ground. Poorer states will receive even less funding and will suffer,” he addedThe G Ram G Bill, introduced in Dec 2025, proposes to replace the MGNREGA launched in 2005. It aims to increase guaranteed rural employment from 100 to 125 days per household per year, integrating job creation with infrastructure development (water, connectivity, climate resilience). The scheme shifts to a 60:40 central-state funding model, raising concerns over state financial burdens. However, Banerjee added that it was too early to take a definitive position on the bill, as its modalities have not yet been finalised. He pointed out that there appears to be pushback even within the ruling party, suggesting a lack of clarity and consensus around the proposed changes.Responding to a question on whether MNREGA funds are being properly utilised, Banerjee said that implementation on the ground remains a major challenge. He further noted that while MNREGA is intended to be a strong support system, its effectiveness depends heavily on efficient execution. “I am not sure how successful MNREGA already is, because on-ground implementation continues to be an issue,” he added.