States to Reap Benefits Under New Funding Framework, SBI Reports

The VB-G RAM G Act promises significant net gains for states, with potential further scaling through states’ contributions. A State Bank of India report suggests states could gain Rs 17,000 crore based on normative assessments, dispelling fears of financial burden from the revised 60:40 funding ratio between Centre and states.

States stand to benefit significantly from the proposed VB-G RAM G Act, with the State Bank of India (SBI) reporting potential gains amounting to Rs 17,000 crore under the new funding framework. By examining a scenario using only the Centre's share, states are projected to benefit substantially more than in the past seven years.

Despite concerns about the revised 60:40 funding split potentially imposing a heavier financial burden on states, SBI argues these fears are largely misinformed. The report clarifies that the new framework, guided by the principles of equity and efficiency, enhances overall fund distribution.

SBI's analysis, comparing normative assessments with the seven-year average MGNREGA allocations, reveals states are general net gainers, with significant benefits for Uttar Pradesh, Maharashtra, and others. The recent legislative endorsement guarantees increased rural employment days, promising comprehensive development.