Union Budget 2026: Govt proposes 'Mahatma Gandhi Gram Swaraj' to strengthen khadi; Opposition terms it 'cosmetic move'

New Delhi: As the Modi government faced flak for omitting the Father of Nation's name from the rural employment guarantee scheme, Finance Minister Nirmala Sitharaman on Sunday announced an initiative to  strengthen khadi, handloom and handicraft, saying it will help in global market linkage and branding.

Announcing it in her budget speech, the minister proposed to launch the 'Mahatma Gandhi Gram Swaraj' initiative to strengthen khadi, handloom and handicrafts. 

"This will help in global market linkage and branding. It will streamline and support training, skilling, quality of process and production. This will benefit our weavers, village industries, One - District – One - Product initiative and rural youth," she said.

Congress Lok Sabha Whip Manickam Tagore told DH, "After Congress taking up the issue in an organised way, love for Mahatma Gandhi has returned. But people know their intentions."

Samajwadi Party Rajya Sabha MP Javed Ali Khan told DH that it was a "cosmetic" move aimed at compensating itself from the loss the ruling party accrued on itself due to people's anger after repealing MGNREGA and omitting Mahatma Gandhi's name.

CPI Rajya Sabha floor leader P Sandosh Kumar said the announcement is “just an eyewash”. At a time several Khadi shops had to close down, he said there have been demands for exempting Khadi from the GST regime but this government has not been positive to this.

In December last year, the Modi government repealed the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with Viksit Bharat - The Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) Act, 2025.

Among other issues, the Opposition had objected to the omission of Mahatma Gandhi's name from the programme. The government had then countered it saying that the mention of Ram in the Act's name was a tribute to Mahatma Gandhi, who idolised Lord Ram.

The budget allocation for the Khadi Gramodyog Vikas Yojana has risen from Rs 1,065.77 crore in 2025-26 budget to Rs 1,094.51 crore.

The grants for creation of capital assets in  Khadi Gramodyog Vikas Yojana were pegged at Rs 109.01 crore, up from Rs 106 crore, which was later scaled down to Rs 60 crore in revised estimates.