Cabinet clears Rs 7,395 crore PM Viksit Gram Swaraj Yojana for panchayats

The Union Cabinet on Wednesday, October 28, 2026, approved the Pradhan Mantri Viksit Gram Swaraj Yojana (PM VGSY), a Rs 7,395.55 crore scheme for 2026-27 to 2030-31 to make gram panchayats more self-reliant. Union Minister Ashwini Vaishnaw, briefing reporters, described it as a "paradigm change": a shift from schemes that tell villages what to do towards building local capacity and planning. The scheme covers more than 2.78 lakh rural local bodies and includes a push for panchayats to raise more of their own revenue.

Gram panchayats are the elected councils that run India's villages. They look after local roads, drains, water supply, street lights and many other services, and they are often the first stop for a villager dealing with the government. Much of their money comes as grants from the Centre and the states. Own-source revenue (OSR) is the money a panchayat raises itself, through local taxes such as property tax, fees and user charges for services such as water or markets. When a panchayat raises more of its own money, it has more freedom to spend on what its people need and depends less on grants that arrive late or come with conditions.

For the rural economy, this matters in practical ways. A panchayat with steady income can maintain a village market, repair a drain before the monsoon or pay for a water pump, the kind of small works that affect farmers, traders and small businesses every day. The scheme's stress on accounting, public disclosure and audit is meant to build trust: villagers are more willing to pay local fees when they can see how the money is spent.

The training target is large. Around 32 lakh people a year, elected members and panchayat staff among them, are to be trained and given digital support. Many elected representatives come to office without experience of budgets, planning or online systems. The Gram Panchayat Development Plan is each village's yearly plan of works, and the scheme supports about 2.55 lakh of them a year on the eGramSwaraj online platform.

(Rs 4,869.48 crore plus Rs 2,526.07 crore equals Rs 7,395.55 crore.)

Short-term: States and Union Territories will prepare annual action plans for approval by the Central Empowered Committee, and training programmes for elected members and staff will be planned.

Long-term: If panchayats raise more of their own revenue and plan better, villages could get more reliable local services, and local government could depend less on grants from above.

Who is affected: Gram panchayats and their elected members and staff; villagers who use and pay for local services; farmers and small rural businesses that rely on village infrastructure; and state governments, which share the cost.

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