NEW DELHI — India’s flagship rural employment program, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), has recorded a sharp decline of 6.76 million registered and active workers in the first two weeks following the nationwide rollout of a new digital payment system, according to an independent analysis by LibTech India, a research group specializing in rural governance. The findings, based on official MGNREGS dashboard data, have raised concerns about potential exclusion of vulnerable workers due to technical and procedural barriers in the transition to the Vay Vandana-Gram Rozgar Awas Manch Grievance Redressal and Management (VB-G RAM G) system.
The Rural Development Ministry, which oversees MGNREGS, has dismissed the decline as routine, asserting that no complaints have been received from the field. However, the scale and timing of the drop—coinciding with the April 2026 transition from the National Electronic Fund Management System (NeFMS) to VB-G RAM G—have prompted questions about the inclusivity of digital welfare reforms in regions with limited internet access and low digital literacy.
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What Happened
LibTech India’s analysis, published on May 15, 2026, examined publicly available data from the MGNREGS dashboard for the first fortnight of April 2026, when the VB-G RAM G system was fully implemented. The study found that the total number of registered workers under the scheme fell from 28.34 crore (283.4 million) to 27.66 crore (276.6 million)—a decline of 6.76 million, or 2.4% of the total workforce. The number of “active workers,” defined as those who had worked at least one day in the financial year, also dropped by a similar margin.
The VB-G RAM G system, introduced to streamline wage payments and grievance redressal, replaced the NeFMS, which had been in use since 2016. The new platform integrates Aadhaar-based authentication, real-time validation of worker details, and a centralized grievance redressal mechanism. The Rural Development Ministry had previously stated that the transition would reduce payment delays and improve transparency.
However, LibTech’s analysis suggests that the shift may have created unintended barriers. Researchers noted that the decline was not uniform across states. Bihar, Jharkhand, and Odisha—states with lower digital literacy rates and patchy internet connectivity—recorded steeper drops in worker registrations compared to states like Kerala and Tamil Nadu, where digital infrastructure is more robust. In Bihar, for instance, registered workers fell by 8.2% in the same period, while Kerala saw a decline of just 1.1%.
LibTech researchers attributed the disparities to the new system’s reliance on Aadhaar-based authentication and real-time validation. Workers in remote areas, particularly those without access to smartphones or stable internet, may have struggled to complete the verification process, leading to their exclusion from the rolls. The group described the decline as “unprecedented” and warned that it could signal systemic issues in the digital transition.
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Why It Matters
MGNREGS is one of India’s largest social welfare programs, providing a legal guarantee of 100 days of wage employment per year to rural households. The scheme serves as a critical safety net for millions of workers, particularly during agricultural lean seasons, economic downturns, and climate-related disruptions. In 2025-26, the program generated over 260 crore (2.6 billion) person-days of employment, benefiting approximately 5.5 crore (55 million) households.
The sharp decline in worker registrations raises concerns about the scheme’s ability to fulfill its mandate. If the drop is linked to the VB-G RAM G transition, it could indicate that digital reforms are inadvertently excluding the very populations the program is designed to support. Rural workers, particularly women, Dalits, and Adivasis, often lack access to digital tools and may face additional hurdles in navigating bureaucratic processes.
The findings also underscore the risks of rapid digitalization in welfare delivery. While digital systems can improve efficiency and reduce corruption, they can also create new forms of exclusion if not accompanied by adequate support mechanisms. The disparity in declines across states highlights the digital divide in India, where infrastructure gaps risk deepening inequality in access to welfare benefits.
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Background and Context
MGNREGS was launched in 2005 under the UPA government and has since become a cornerstone of India’s rural employment policy. The scheme operates on a demand-driven model, where workers can request employment from local gram panchayats (village councils), which are then obligated to provide work within 15 days. Wage payments are made directly to workers’ bank accounts, a process that has historically been plagued by delays and leakages.
The shift to digital payment systems began in 2016 with the introduction of NeFMS, which aimed to reduce delays by automating wage transfers. However, the system faced criticism for technical glitches, including failed transactions and mismatches between worker details and Aadhaar records. The VB-G RAM G system was introduced as an upgrade, with the ministry claiming it would address these issues through real-time validation and a centralized grievance redressal portal.
The transition to VB-G RAM G was rolled out in phases, beginning in select districts in late 2025 before being expanded nationwide in April 2026. The ministry had conducted training sessions for state officials and gram panchayat functionaries to ensure a smooth transition. However, LibTech’s analysis suggests that the rollout may have outpaced the capacity of workers and local administrators to adapt.
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Competing Claims and Uncertainty
The Rural Development Ministry has rejected LibTech’s findings, stating that the decline in worker registrations is a routine fluctuation and not linked to the VB-G RAM G transition. In a statement to The Hindu, a ministry official said, “We have received no complaints from the field regarding the new system. The data reflects normal variations in worker participation, which can be influenced by seasonal factors such as agricultural cycles.”
The ministry also pointed to an increase in the number of person-days generated under MGNREGS in April 2026 compared to the same period in 2025, arguing that the scheme’s overall performance remains strong. However, LibTech researchers countered that person-days generated are not a reliable indicator of worker participation, as they can be skewed by increased demand for work in certain regions.
Independent experts have called for further investigation into the causes of the decline. Reetika Khera, a development economist and professor at the Indian Institute of Technology Delhi, told Herald Express that the drop is “concerning” and warrants a closer look at the VB-G RAM G system’s implementation. “While digital systems can improve efficiency, they can also create new barriers for marginalized workers,” she said. “The ministry should conduct a field-level audit to determine whether the decline is due to technical issues or other factors.”
There is also uncertainty about whether the decline represents a temporary disruption or a long-term trend. If workers are unable to re-register due to technical hurdles, the drop could persist, leading to a reduction in the scheme’s reach. Conversely, if the decline is due to seasonal factors or administrative delays, the numbers may rebound in the coming months.
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What to Watch Next
1. Ministry Response: The Rural Development Ministry has not yet announced any corrective measures in response to LibTech’s findings. Observers will be watching for any policy adjustments, such as a phased rollback of VB-G RAM G in states with high declines or the introduction of offline alternatives for workers unable to access digital systems.
2. State-Level Variations: The disparity in declines across states suggests that local factors, such as digital infrastructure and administrative capacity, play a significant role in the transition’s success. States like Bihar and Jharkhand may need targeted interventions to ensure workers are not excluded from the scheme.
3. Worker Feedback: The absence of complaints to the ministry does not necessarily indicate smooth implementation. Workers in remote areas may lack the means or awareness to report issues. Civil society groups and local journalists could play a crucial role in gathering ground-level feedback on the transition’s impact.
4. Long-Term Trends: If the decline in worker registrations persists, it could signal a structural issue with the VB-G RAM G system. Monitoring the data over the next few months will be critical to determining whether the drop is temporary or indicative of a broader problem.
5. Legal and Policy Challenges: If the transition is found to have excluded workers unlawfully, it could face legal challenges. The Supreme Court has previously ruled that welfare schemes must not create barriers to access, and any systemic exclusion could violate these principles.
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Conclusion
The sharp decline in MGNREGS worker registrations following the rollout of the VB-G RAM G system highlights the challenges of digitalizing welfare delivery in a country as diverse and unequal as India. While the Rural Development Ministry has dismissed concerns, the scale and timing of the drop demand closer scrutiny. If the new system has created unintended barriers for marginalized workers, it risks undermining the scheme’s core objective of providing employment security to rural laborers.
The findings also serve as a cautionary tale for policymakers. Digital reforms in welfare programs must be accompanied by robust support mechanisms, including offline alternatives and localized training, to ensure that no worker is left behind. As India continues to expand its digital governance initiatives, the MGNREGS transition offers a critical case study in balancing efficiency with inclusivity.
For now, the focus must remain on ensuring that the 6.76 million workers who disappeared from the rolls are not permanently excluded from the safety net they rely on. The coming months will be crucial in determining whether the decline is a temporary glitch or a sign of deeper systemic issues in India’s digital welfare architecture.
Story synopsis gathered from: [The Hindu — source](https://www.thehindu.com/news/national/worker-rolls-shrink-by-676-lakh-in-first-fortnight-after-mgnregs-transition-finds-libtech/article71226103.ece).
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Story synopsis gathered from: The Hindu – National — source.
