In the history of Indian democracy, the Union Government’s annual budget has always been significant. However, the 2026–27 budget has raised several alarming concerns for rural India. In particular, the vague provisions of the VBG Ji Ram Ji scheme and major changes in the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) have put the future of rural workers at risk. A deeper analysis of this budget reveals that these changes are not merely administrative but are closely linked to political and economic policies that will have far-reaching consequences for millions of rural households.
A serious problem emerges from the budget documents regarding the VBG–Ram Ji scheme. There is no clarity on when and where this scheme will be implemented. There is also no information on how funds will be allocated across states or how the transition from MGNREGA to this new scheme will be managed. This uncertainty has put state governments in a difficult position. They are being forced to implement major budget allocations blindly. Not only state governments, but even senior officials are confused, raising serious doubts about the successful implementation of the scheme. The central government must urgently end this ambiguity and release detailed information about the VBG–Ram Ji scheme; otherwise, rural development programs risk coming to a halt.
Under this scheme, every household has been promised 125 days of guaranteed employment. However, only 42 percent of the required budgetary allocation has been provided for this guarantee. This indicates that the guarantee exists only on paper. According to estimates, to provide 125 days of work to all active MGNREGA-registered households, the total VBG–Ram Ji budget should be at least ₹3.84 lakh crore, of which the central government’s 60 percent share would be ₹2.30 lakh crore. However, the budget allocates only ₹95,692 crore, which is just 42 percent of the required amount. More worryingly, to actually provide 125 days of employment to every registered household, the budget would need to be around ₹7 lakh crore, which is practically impossible. This clearly shows that the government’s guarantee is mere rhetoric.
When the states’ share is considered, the situation appears even more bleak. If the central allocation of ₹95,692 crore is assumed to be 60 percent, the states’ share would be ₹63,795 crore, bringing the total allocation to ₹1.59 lakh crore. This would provide active households with an average of only 52 days of work, which is less than half of the promised 125 days. According to guidelines, states must match the central allocation with their own spending. Therefore, to provide 125 days of employment, states would need to spend more than ₹2 lakh crore far beyond their financial capacity.
According to MGNREGA analysis, the financial year 2025–26 is likely to end with arrears of at least ₹11,000 crore. If arrears from states such as West Bengal are included, the total could rise by another ₹15,000 crore. In 2026–27, half of the ₹30,000 crore allocated for MGNREGA is likely to be spent on clearing arrears. However, the central government has not clarified the purpose of this allocation. If it is intended to be used for MGNREGA work during the first quarter, when the VBG–Ram Ji program begins, it will be completely inadequate. There is no clarity on how workers will be supported during the summer months, traditionally the busiest season for MGNREGA. This uncertainty threatens the livelihoods of millions of rural families.
The reality is that the country’s resources and labor force are being sacrificed in the fire of corporate development. Last year’s budget was ₹50.65 lakh crore. People were offered so-called welfare schemes as a lure, claiming they would be lifted out of hunger, malnutrition, disease, illiteracy, homelessness, and unemployment. Eighteen flagship schemes of the Modi government were promoted as vehicles of development, including the National Ayush Mission, PM Shri, Ayushman Bharat Health Infrastructure Mission, PM Awas Yojana (Rural and Urban), PM Awas Yojana Urban 2.0, Urban Challenge Fund, Jal Jeevan Mission, PM Gram Sadak Yojana, PM Internship Scheme, Research and Innovation, and the India Artificial Intelligence Mission.
In the previous budget, only ₹2.23 lakh crore was allocated to these schemes just 0.44 percent of the total budget. Even then, questions were raised about the adequacy of this allocation. Those who questioned were labeled anti-national and anti-development. However, the latest budget reveals that these development schemes have effectively collapsed, as even this inadequate allocation was not fully spent. Of the ₹2.23 lakh crore allocated, only ₹81,350 crore was spent just 36.49 percent of the allocation and 0.16 percent of the total budget. Clearly, India’s 1.4 billion people were forced to spend their own money on health, education, housing, employment, and other basic needs.
It seems that India can achieve the status of a “Vishwaguru” only by becoming a repository of ignorance and humiliation. Over the past eleven years, while the total budget has increased, public welfare expenditure has declined. This year’s budget allocates only ₹2.12 lakh crore for these schemes less than last year despite the total budget increasing to over ₹53.47 lakh crore. Even after accounting for 5 percent inflation, the real allocation is only 0.37 percent of the total budget. Although ₹2.12 lakh crore has been allocated, actual expenditure is unlikely to exceed ₹77,000 crore. Thus, regardless of how large the announced allocations appear, they make little difference because the government’s deliberate policy is not to spend them.
For the past two decades, MGNREGA has been a lifeline for rural India and proved its usefulness during the COVID-19 pandemic, helping sustain agricultural growth during a global crisis. This demand-driven scheme has been dismantled and replaced with the allocation-based VBG–Ram Ji scheme, referred to as Gram Ji in the Modi government’s language. While MGNREGA aimed to provide employment to rural people, Gram Ji aims to establish rural infrastructure networks for a corporate-driven India. ₹95,692 crore has been allocated almost equal to last year’s MGNREGA expenditure. However, this amount will not be spent unless states contribute ₹63,795 crore for implementation.
Given how the Modi government has taken over state resources and revenue sources, such state contributions are highly uncertain, meaning even this allocation may remain unspent. Under centrally sponsored schemes, finance commission grants, and other transfers, states received ₹2,03,801 crore less than budgeted in the current financial year. Despite this major cut, the 2026–27 budget further reduces state transfers by ₹69,456 crore compared to the 2025–26 budget estimates. Even as state funds are curtailed, they are forced to contribute 40 percent to central schemes like MGNREGA.
If states contribute to central schemes, they will be forced to cut their own welfare programs. In fact, state-run social development schemes have been the key to India’s development, as the central government’s per capita contribution to social welfare has declined over the past decade while state contributions have remained significant. Therefore, the Modi government’s approach is not only against healthy centre state relations but also against the federal spirit of the Constitution. Undermining state rights and development cycles may serve petty politics, but it cannot accelerate national development.
The rosy picture presented in the Economic Survey has been disrupted by the budget, as corporate and wealthy tax concessions have reduced revenue. Tax revenue for the current year is estimated at ₹26.74 lakh crore, far below budget estimates. For 2026–27, tax revenue is projected at only ₹28.67 lakh crore, just ₹30,000 crore more than this year’s estimate. A significant portion of this revenue will come from fuel taxes. This indicates that revenue is declining rapidly relative to national income because the general public can no longer be squeezed further.
To meet fiscal deficit targets demanded by imperialist institutions like the World Bank and IMF despite weak revenue, the government can only cut welfare programs and attack living standards. This was done in previous budgets and has been repeated this year. Therefore, a low fiscal deficit is not commendable it means the wheels of development are being stalled to meet targets.
Last year, major income tax concessions were given to the middle class in the hope that increased savings would stimulate domestic demand, create jobs, and offset revenue losses. However, this year’s budget remained silent on the outcomes, as hopes have turned into disappointment. Domestic markets did not expand, industries did not open, and investment did not rise. Middle-class savings were spent on imported consumer goods. This raises a fundamental question: Should money be invested in the 95 percent working population or the 5 percent wealthy elite?
To expand the domestic economy, minimum wages for informal workers must be increased, vacancies filled regularly, contractual labor abolished, farmers given remunerative prices as per the Swaminathan formula, and rural laborers provided employment and higher wages under MGNREGA. But none of this is included in the budget because it goes against corporate interests.
Government officials and spokespersons summarize this budget by claiming that corporations will now drive development, provide jobs, and ensure quality services. Therefore, obstacles to business will be removed. The government will play only a guiding role by reducing debt and fiscal deficits. For ordinary people, this means the government will step aside and open the path for corporate plunder through privatization and disinvestment. After labor laws that enslave workers, agricultural laws will again be bulldozed over farmers. Welfare spending will be cut, corporate loans will be waived, and tax concessions will be granted. The budget announces the elimination of food and fertilizer subsidies over the next five years. Voices opposing these policies will be suppressed, and communal polarization will be used to divide the people.
This budget clearly shows that rural India is being exploited in the name of development. The ambiguity of the VBG–Ram Ji scheme, the inadequate funding for the MGNREGA transition, financial pressure on states, and cuts in welfare programs send a single message: the interests of ordinary people come last. Development does not happen by painting rosy pictures on paper. Funds must be spent on the ground, schemes must be implemented, and people’s welfare must be prioritized. Until this happens, the dreams of the majority of Indians will remain just dreams.
(The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Free Voice.)
