MGNREGA: Thomas Piketty, other global experts cite concerns in open letter to government

Leading world economists, policymakers, lawyers, and civil society members have expressed concern over the dismantling of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and its replacement with the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Bill, 2025, passed by Parliament on 18 December.

In an open letter, these individuals while strongly supporting and reaffirming their commitment to MGNREGA , urged that the government to not dismantle the programme, which implements a demand-driven legal right to employment.

The letter states that MGNREGA was originally passed unanimously by Parliament and received support from all parties, cutting across political lines. The fundamental principle of MGNREGA was that the central government should guarantee employment security–as it ensures economic dignity as a fundamental right. The letter states that the results of MGNREGA are living proof of this.

According to the letter, MGNREGA generates over two billion person-days of work for approximately 50 million families every year, making a significant difference. More than half of the total workers in MGNREGA are women, and about 40 per cent belong to Scheduled Castes or Scheduled Tribes. In the initial years of MGNREGA, there was a tremendous increase in wages in villages. Various studies conducted over time have confirmed its positive impact on economic output and efficiency, dispelling misconceptions surrounding it.

However, the letter points out, long-standing funding shortages and payment delays have hampered its implementation. But now, the move to hand it over to the states without the necessary financial support has become a threat to its very existence. The signatories of the letter stated that the states do not have the same financial capacity as the central government. The new funding pattern in the Bill replacing MGNREGA creates a dangerous situation. On the one hand, it places the legal responsibility of providing employment on the states even as the central government is withdrawing funding for the scheme. States that previously contributed only 25 per cent of the material costs will now have to bear 40 per cent to 100 per cent of the total cost, which will lead financially weaker or poorer states to reduce project approvals, directly resulting in a decrease in the demand for work.

The letter states that this structural sabotage is further exacerbated by arbitrary "switch-off" powers, as the new Bill allows for the arbitrary suspension of the scheme and the elimination of the guarantee. Citing the example of West Bengal, where funding was stopped without reason for the past three years, the letter states that this is an example of political misuse, and the new framework of the Bill institutionalizes this risk, imposing unfunded mandates on states without consultation.

Economists and supporters of MGNREGA have stated that the demand-driven design of MGNREGA not only provides work and livelihoods to those in need but also creates essential rural assets such as wells, roads, and ponds, boosting the local economy. It is argued that by making projects financially difficult for the states, the multifaceted impact of MGNREGA is being undermined.

The letter concludes by stating that MGNREGA has attracted global attention with its proven achievements and innovative approach. Ending it now would be a historic mistake. It would eliminate a proven instrument for poverty reduction, social justice, and environmental stewardship. “We urge the central government to reinstate it by ensuring guaranteed funding, timely wage payments, and unequivocally restoring the fundamental guarantee of the right to work,” it says.

This letter was prepared by the Levy Economics Institute and signed by experts such as Thomas Piketty, Olivier De Schutter and Isabel Ferreras. The full list of signatories is below:

• Olivier De Schutter, United Nations Special Rapporteur on extreme poverty and human rights

• Isabel Ferreras, Research Director FNRS, Professor University of Louvain, Senior Research Associate Center for Labor and a Just Economy, Harvard Law School

• James Galbraith, Lloyd M. Bentsen Jr. Chair in Government/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, USA

• Darrick Hamilton, Henry Cohen Professor of Economics and Urban Policy, New School for Social Research, USA

• Mariana Mazzucato, Professor and Founding Director, University College London, Institute for Innovation and Public Purpose

• Thomas Piketty, Professor, EHESS and Paris School of Economics, Co-Director, World Inequality Lab and World Inequality Database

• Joseph E. Stiglitz, University Professor and Nobel Laureate, Columbia University, USA

• Pavlina R. Tcherneva, President and Professor of Economics, The Levy Economics Institute of Bard College, USA

• Imraan Valodia, Professor of Economics, University of Witwatersrand, South Africa

• Randall Wray, Professor and Senior Scholar, Levy Economics Institute of Bard College, USA