From Job Guarantee to Labour Guarantee: How VB-GRAM Can Turn Panchayats into Engines of Productivity

When the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was enacted in 2005, it addressed a fundamental vulnerability of rural India: income insecurity. By legally guaranteeing wage employment, it functioned as a shock absorber during droughts, agrarian distress, and economic downturns. For that role, it deserves enduring credit.

Yet, from the mid-2010s, social sector professionals at the grassroots (myself included) have noticed a structural limitation. Panchayats are often compelled to approve works not because they were economically meaningful, but because the statute required job-days to be generated. Asset creation, in many cases, has become incidental rather than intentional. This is not a failure of intent, but a consequence of design: the system rewarded employment quantity, not economic quality.

Two decades since the enactment of MGNREGA, India stands at a different juncture. The new Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (VB-GRAM) Bill, introduced in the Parliament today, offers an opportunity not merely to replace the MGNREGA, but to upgrade the very idea of "employment guarantee".

The question is not whether job guarantees should continue—they must—but what kind of jobs should be guaranteed, and through which institutions.

The Core Shift Required: From Public Works to Productive Work

MGNREGA’s model was fundamentally state-centric: the government identified works, employed labour, and created assets. This made sense when the primary goal was consumption smoothing.

Today, however, India’s challenge is structural transformation:

absorbing surplus labour,

strengthening MSMEs,

enabling the green and circular economy,

and cushioning labour markets against automation-driven disruptions.

In this context, an employment guarantee that remains confined to stand-alone public works risks becoming fiscally heavy and economically shallow.

What is required is a shift:

from job guarantee to labour guarantee,

from asset creation for its own sake to value creation embedded in real economic ecosystems.

VB-GRAM, if designed imaginatively, can enable this shift.

Panchayats as the Missing Institutional Link

The most under-appreciated opportunity in the current debate lies in the role of panchayats themselves.

Under MGNREGA, gram panchayats gradually became administrators of job cards, muster rolls, and compliance. Their constitutional promise as institutions of local self-government was only partially realised.

VB-GRAM, combined with the government’s emphasis on Viksit Bharat, can revitalise panchayats by repositioning them as local labour market institutions, backed by state governments.

In practical terms, gram panchayats can perform five interlinked functions.

The Proposed Roles of Gram Panchayats

1. Mapper of Local Labour and Livelihoods

No central ministry or digital dashboard can replicate what a gram panchayat already knows:

who is available to work,

when they are available,

what informal skills they possess,

who migrates seasonally and why.

Formalising this into a living labour map converts tacit local knowledge into institutional capacity. This is not surveillance; it is governance rooted in proximity.

2. Aggregator of Fragmented Labour Supply

India’s labour market failure is less about absolute unemployment and more about fragmentation. Workers are scattered; enterprises often demand labour in small, uneven bursts.

Panchayats can aggregate individuals into organised labour pools, matching scale to demand. This aggregation alone can unlock productivity that neither markets nor welfare schemes achieve independently.

3. Skiller—But in a Grounded Sense

This is not about long certification courses. It is about:

task-specific readiness,

safety and process discipline,

micro-skills aligned with immediate demand.

Whether through SHGs, local institutions, NGOs, or district-level facilities, panchayats can facilitate continuous, practical skilling that actually sticks because it is tied to work.

4. Provider of Labour to the Real Economy

This is the most consequential shift.

Instead of individuals seeking work from the State, panchayats can supply organised labour blocks to:

MSMEs,

small cooperatives,

SHGs,

PM MUDRA-supported enterprises,

circular economy ventures.

In doing so, the State does not retreat; it underwrites labour risk, while productive activity takes place in the economy.

5. Protector of Labour Dignity and Stability

Crucially, the public role does not disappear. Panchayats, supported by states, can:

enforce wage floors,

ensure timely payments,

guarantee basic safety and dignity,

absorb demand shocks when private activity fluctuates.

This prevents both labour exploitation and MSME fragility.

The Biomass and Circular Economy Angle 

Emerging sectors such as biomass-to-biofuels (which I discussed yesterday in this blog) alongwith the need for a larger, circular economy illustrate why this model is timely.

These ecosystems:

require low-to-no skill labour,

operate continuously rather than seasonally,

are locally rooted,

are MSME-dominated,

align with climate and energy priorities,

span rural and urban spaces.

A gram panchayat that maps biomass availability, aggregates labour, facilitates basic skilling, supplies workers to local enterprises, and protects wages becomes not a welfare office—but a node in India’s green industrial transition.

From Welfare to Capability, Without Abandoning Security

This model avoids two false choices:

that welfare must be dismantled to create productivity, or

that the State must directly employ labour forever.

Instead, it creates state-enabled local labour markets, where public guarantees coexist with private and cooperative production.

If VB-GRAM evolves in this direction, several outcomes follow naturally:

employment guarantees become development tools,

migration becomes choice-driven rather than distress-driven,

MSMEs gain labour stability,

decentralisation becomes economically meaningful.

Conclusion: Making Viksit Bharat Institutional, Not Rhetorical

The ambition of Viksit Bharat cannot rest on sloganeering or renaming schemes. It requires institutional imagination.

Reimagining panchayats as mappers, aggregators, skillers, providers, and protectors of labour offers precisely that. It builds on India’s constitutional architecture, aligns with its economic structure, and responds to future labour market realities.

VB-GRAM has the potential to be remembered not as “MGNREGA 2.0”, but as the moment when India shifted from guaranteeing jobs to guaranteeing productive participation in growth.

The opportunity is rare. It should not be missed.