<h1>Employment guarantee scheme changes will cut state funding, limit rural employment and stress state finances.</h1> Converting the employment guarantee scheme to a 60:40 funding ratio will materially reduce central transfers to states, constrain employment generation under the programme and worsen state budgetary stress. This fiscal reallocation is characterised as a shift in Centre-state responsibilities that, together with recent tax-rate and GST changes, has reduced state revenues and risks diverting benefits away from rural beneficiaries toward corporate interests, undermining the scheme's capacity to deliver employment and income support.