Big, poor States to get higher funds under govt.’s new rural jobs scheme, Pg9

Key Highlights:

• The Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (VB-G RAM G) will replace the Mahatma Gandhi National Rural Employment Guarantee Act on July 1.
• Funding allocations to States under VB-G RAM G will be based on the 16th Finance Commission’s horizontal devolution formula.
• The funding ratio between the Centre and States for wage bills under VB-G RAM G is set at 60:40 for most States.
• A portion of the funding will be based on State performance, including timely wage payments and compliance with social audit requirements.

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Detailed Insights:

• The VB-G RAM G shifts away from the demand-based approach of MGNREGA, which aimed to stretch the scheme’s budget to match demand.
• The 16th Finance Commission’s horizontal devolution formula prioritizes poorer States through metrics like GSDP Distance and benefits larger States through population considerations.
• The GSDP Distance measures how far a State’s per capita GSDP falls short of the wealthiest States, carrying the maximum weightage (42.5%).
• Performance criteria for funding allocation include timely wage payments, compliance with social audit requirements, and percentage of completion of works.

Key Concepts Involved:

• Horizontal Devolution: The distribution of tax revenues between different States by the Finance Commission.
• GSDP Distance: A metric measuring the gap between a State's per capita GSDP and that of the wealthiest States.
• Social Audit: An assessment of a program's impact and effectiveness by those affected by it.